Couch potatoes move online

Success of BBC iPlayer drives on-demand TV, but revenue lags

Neon Kelly, Computing 14 Feb 2008

The online TV market is expected to double in size over the coming year, fuelled by the popularity of the BBC’s iPlayer service.

About 800 million free-to-view TV streams and downloads were accessed by UK homes in 2007, according to media researcher Screen Digest. The figure is forecast to hit 1.5 billion this year, and 2.8 billion by 2012.

But revenue is growing more slowly, rising from £19m last year to just £28.5m in 2008.

With the BBC accounting for 38 per cent of free-to-view streams last year, critics blame the broadcaster for exploiting its public funding to steal a march in new markets.

But the corporation’s rivals are also to blame, said Screen Digest senior analyst Arash Amel.

“Viewers have been underserved by the strategy of other broadcasters,” he said.
“We are not seeing the kind of strategies that have driven online video syndication, sharing and so on. But we are seeing these features in the iPlayer.”

The BBC’s dominance is also the result of its hard work, said Analysys principal analyst Matt Yardley.

“The BBC’s remit is to maximise the reach to licence payers and it is a good thing that it is trying to lead the way,” he said.

After a slow start, free-to-view revenue is expected to reach £98m by 2012 as new initiatives kick in.

Channel 4, ITV and the BBC are collaborating on Kangaroo, a video-on-demand platform providing content from all three which is expected to be available later this year.

And hardware convergence will blur the boundaries between TV broadcasting and next-generation content.

Broadcast methods will be increasingly irrelevant, said Simon Gauntlett, technology director at trade body Digital TV Group.

“From a consumer point of view, you simply want to get content at the touch of a button. You don’t care if it is broadcast, streamed or downloaded,” he said.

A spokeswoman for the industry regulator said: “Ofcom’s market impact assessment found that the iPlayer was likely to stimulate considerable interest in other services to the benefit of consumers and businesses.”

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