Tag Archives: Video on Demand

Sky offers 20Mbps broadband for free

As of June 1, British broadcaster Sky is to upgrade all of its existing broadband customers to (up to) 20Mbps, and streamline its packages to two simple offerings. The company is also going to give all Sky TV and telephone line subscribers the highest speeds possible for free.

Sky has created two broadband options to suit all of its customers’ needs, with Sky Everyday Lite aimed at those who casually browse the internet, and Sky Unlimited for the more hardcore ‘net user.

Everyday Lite will be free to all Sky TV customers with Sky Talk, but will be capped with a 2GB monthly download limit, whereas, for an extra £7.50 per month, the Unlimited plan is completely open ended for massive use.  It comes with no usage caps, fair use policies or traffic management, and it is essentially created for those who want to use Sky Player video-on-demand services.

Of course, the Digital Economy Bill will still be in effect, but Sky pledges not to slow down traffic, even at busy times of the day.


Fragile model of video on demand

When the BBC Trust last week provisionally approved Project Canvas, the BBC’s internet-TV joint venture, the prospects of video-on-demand technology received a substantial boost.

The coming year is expected to see an increase in the number of ways that consumers can access VOD services – such as the BBC iPlayer, ITVPlayer and Channel 4’s 4oD – through a regular television set.

But as free-to-air broadcasters face higher charges for internet delivery, the TV industry is pondering how profitable free catch-up services will be as they move into the living room.

Serving up more programmes to larger audiences on bigger screens will come at a cost to the broadcasters – an outlay for internet delivery that analysts predict will rise along with the popularity of VOD services. By some estimates, the main terrestrial broadcasters are paying tens of millions of pounds a year to ensure the quality of PC-based catch-up TV services.

But technical advances – and consumers’ expectations, set by YouTube and the iPlayer – are forging ahead before the economics of delivering these services are clear.

“In the past six months, it’s all leapt ahead,” says Nigel Walley, managing director of Decipher, a media consultancy. “Some of the internet capabilities are coming to TV faster than we thought.”

Futuresource Consulting forecasts that one in five flat-panel TVs shipped in Europe next year will be ready to connect to the internet straight out of the box. By Christmas 2010, the first TV equipment based on Project Canvas should be available.

With iPlayer already available on several set-top boxes and games consoles, soon millions more households will be watching VOD on the screen for which it was originally intended – but delivered over the internet, not an aerial.

“Once people discover [iPlayer] on TV they use it frequently and regularly,” says Rahul Chakkara, controller of TV platforms in the BBC’s Future Media and Technology unit. “We know most people will use [iPlayer] on TV – the question is when rather than if.”

The speed of technological change could catch some broadcasters out, says Michael Cormish, chief executive of Blinkbox, an independent VOD service.

“Broadcasters have never had to manage distribution [themselves] before,” he says. “VOD is an attempt by the broadcasters to self- distribute and that’s the reason why they’ll find it tough. It’s not a skillset they have required . . . Most will end up spending a multiple of their initial budgets to try to compete, or simply exit.”

Jon Gisby, Channel 4’s director of new media and technology, says VOD “means a different set of economics than we have in linear and broadcast, particularly in distribution costs.

“We need to think through carefully how our video quality evolves based on bandwidth costs, and the money we can bring in off the back of it,” he says.

The BBC is also looking at its distribution costs as part of the current review into the scale and scope of its operations.

Some analysts question whether VOD can be as profitable as broadcast TV. The dual costs of piping internet video into the home and licensing content from producers – both paid out on a per-view basis – “may call into question the level of profits that can be made in the long term” from VOD, says David Cockram of Oliver & Ohlbaum, a media consultancy. “More people are taking more of the pie.”

Broadcasters already have to pay companies providing “content delivery networks” to ensure their on-demand programming reaches viewers in good quality and without loading-time delays mid-video. Every time a programme is viewed online through their VOD services, the BBC, ITV, Channel 4 and other broadcasters pay a CDN provider such as Akamai, Level 3 or, soon, BT.

“It’s different to traditional broadcast because as you get more users, the costs go up,” says Darren Waterman, a director at PwC’s media strategy unit.

Today, a half-hour programme costs between 2p and 5p to stream through a CDN every time it is viewed. That may not sound much, but with the iPlayer serving up almost 60m TV shows in November, a broadcaster’s CDN costs could already exceed £1m a month.

“The costs scale horribly,” says Mr Cockram. “The big open question is whether individual content aggregators such as the broadcasters will be able to cap those total [delivery] costs in future. That is completely uncertain.”

But Ben McOwen Wilson, director of online and interactive at ITV, says costs are already on the way down. “The market is beginning to deliver and costs are dropping,” he says.

Broadcasters and network owners are working more closely together, he says, with the most popular content to be stored close to major cities, rather than sent out nationally from a single London data centre.

The advertising recession has not hit internet video as hard as broadcast, with each online spot costing several times as much as a TV ad. But there are fewer ads in each online show, because broadcasters believe audiences will not put up with as many interruptions as on regular TV.

So the broadcasters may soon have to start charging for video services, says Mr Waterman. “The difficulty is that the BBC is giving catch-up away for free. That makes it harder for everyone to charge,” he says.

Although the economics of VOD are tricky for broadcasters to navigate, internet video is likely to account for just 5 to 10 per cent of total TV viewing by 2020, according to Enders Analysis – meaning they are unlikely to threaten traditional sources of revenues.

Nonetheless, Mr Gisby says 4oD is expected to turn a “modest profit” in 2009 for the first time since launching in 2006. “We believe there is a viable commercial business model for VOD,” says Mr Gisby, “but it’s still quite fragile and has a lot of risk associated with it.”


Baidu launching online high-quality video service

High-quality online video has been in high demand in China, and Chinese search provider Baidu is hoping to fulfill that need. Baidu announced on Wednesday that it is creating an independent company to offer premium online videos to Chinese Internet users. The new entity is designed to work with content providers to supply copyrighted material, including movies, TV shows, sports, and animation, and it will generate its revenue through advertisements. Baidu, which has outshined Google’s Chinese search engine to become China’s top search provider, has been eager to get into the online-video business.

BBC gives go-ahead for free online TV service

The BBC Trust has given the provisional go-ahead to Project Canvas, a video-on-demand joint venture that offers free-to-air broadcasts and internet content on -television.

The governing body of the BBC said it was setting conditions after reviewing more than 800 consultation responses from industry and individual stakeholders. The likely public value of the proposal, it said, justified any potential damaging effect on the market.

The venture between the BBC, ITV, BT Group, Five, Channel 4 and Carphone Warehouse, will see set-top boxes made available to access on-demand television services such as the BBC’s iPlayer and ITVPlayer.

The set-top boxes are expected to cost about £200 and could be on sale next year. Users will have access to websites such as Facebook, YouTube and Flickr via their televisions. Electronic mail could be used if keyboards were added.

Ian Maude, head of internet at Enders Analysis, said Canvas would have little effect on the television market until boxes with its software cost less than £50.

“Initial take-up will depend on how much BT, Carphone Warehouse and other service providers are willing to subsidise Canvas set-top boxes,” he said.

Trust approval did not mean Canvas would necessarily escape further scrutiny from the Office of Fair Trading, Mr Maude said.

The project, designed to strengthen free-to-air broadcasters, has come under fire from pay TV groups such as BSkyB, which says the BBC’s involvement raises potential state aid issues.

Graham McWilliam, director of corporate affairs for BSkyB, said: “There is no need for public money to be spent on replicating what’s set to be delivered through commercial investment.

“Consumers will not benefit if the BBC’s role in Canvas prevents other innovative services


ITV and Hulu poised for joint content deal later this month

ITV and Hulu, the VoD service that will soon launch in the UK, are to sign a deal this month allowing the broadcaster to distribute full-length episodes of ITV shows on the platform.

The landmark deal will significantly boost Hulu’s UK appeal, as well as potentially transforming ITV’s online presence. As part of the deal, ITV will gain an equity stake in Hulu UK, understood to be about 25%. Hulu’s parent company is equally controlled by Disney, NBC Universal, Providence Equity and News Corp.

Some ITV shows will be available exclusively on Hulu UK. ITV is the only UK broadcaster expected to sign an exclusive online content deal with Hulu. Central to the deal has been a resolution to disagreements over who will sell advertising around ITV content on Hulu. But it is understood both companies have come to what one source called a “happy compromise”. An agreement allowing Hulu to distribute clips or short versions of ITV shows is understood to already be in place and a deal for full-length ITV shows is close. Following the deal, Hulu plans to appoint its first UK chief executive.  Its plans to launch in the UK are being handled by Hulu’s senior vice-president of international, Johannes Larcher. Hulu was expected to launch earlier this year following the demise of Project Kangaroo, the online VoD venture backed by ITV, Channel 4 and BBC Worldwide, which was blocked by competition regulators in February. However, since then, the online video market has changed markedly with the launch of MSN Video and the imminent launch of YouTube’s long-form service and SeeSaw, the VoD service formed from the remnants of Project Kangaroo.

ITV and Hulu declined to comment.