Media: All about ... Video-on-demand

Is 2008 going to be the year video-on-demand takes off?

One time soon, by virtue of sheer staying power if nothing else, media futurologists are going to be spot-on in their predictions about video-on-demand. Every January, the usual suspects are invited to buff up their crystal balls and tell us what they can see emerging in the months ahead. Invariably, they'll come up with some variation on a "2008 will be the year when video-on-demand comes of age" theme.

Or 2007 or 2006 or 2005. In fact, the revolutionary tipping point has been eagerly awaited every year since the beginning of Time Warner's cable network trials in the Orlando area of Florida in 1995. Soon, though, soon. And you can see why excitement about the prospects for 2008 has been running so high. The numbers, some say, are starting to look very interesting indeed.

Last year saw an unprecedented number of launch announcements not just from media owners, but also from would-be online platform providers such as Joost. There are huge amounts of cash being sunk into this - just paying the electricity bills for the server farms needed to run these services (they consume the same amounts of power as small towns) is a daunting enough prospect.

Conspicuous power consumption has never offered any sure-fire guarantee of success - but even in the few short weeks since the turn of the year, we've seen indications from the BBC that its iPlayer, which was relaunched back in December, is comfortably exceeding its viewer targets. And this followed hard on the heels of an announcement by Tiscali that a whopping 63 per cent of UK consumers "would prefer to watch on-demand programmes on their TV sets, via their broadband connections".

Unfortunately, the study goes on to reveal that only 17 per cent have actually done so. Still, Tiscali is in no doubt about the conclusions that can be drawn from this. "Consumers predict the end of traditional TV," is the title of its press release. It continues: "42 per cent (of the British population) believe that today's traditional television schedules will be a thing of the past in ten years' time." So there we have it. Roll on 2018.

1. During 2007, mainstream media owners were stung into action by their growing realisation that non-traditional platforms and suppliers were dominating the on-demand agenda. YouTube had been joined by web-based content aggregators such as Joost, while internet protocol TV service providers such as Tiscali and BT Vision continued to offer video-on-demand services, as well as a conventional digital multichannel line-up. BSkyB also upped the ante with its portfolio of on-demand services, utilising not just the web, but downloads to Sky+ boxes. The cable operator Virgin was active, too.

2. The BBC led the way, playing a central role on Project Kangaroo, a web-based content-on-demand platform that will offer archive material from the BBC, ITV and Channel 4. The BBC also launched iPlayer on - it allows access, on demand, to a limited number of programmes broadcast on BBC channels in the previous seven days. The BBC announced last week that more than 3.5 million programmes had been viewed on its iPlayer software between 25 December and 7 January.

3. For advertisers, the on-demand service on will be of most interest. Launched in May last year, it is now seen as a serious ad revenue growth opportunity, with advertisers being offered "pre-roll" commercial slots (you have to watch a commercial before the programme you've selected), plus sponsorship opportunities and banner ads. ITV recently appointed Gary Cole (from Telegraph Media) to head up its online sales team. Online advertising, including video-on-demand slots, are sold separately (they're not included in the agency deal negotiations covering mainstream advertising on the ITV family of broadcast channels), and revenues associated with video-on-demand are expected to be a significant component in the £150-million-a-year revenue ITV hopes take from online advertising formats by 2011.

4. The other major broadcaster offering programmes on demand is Channel 4. It has been pursuing a hybrid approach: you can access its archives via the internet and your PC or laptop; and on-demand content is also available via cable (Virgin) or IPTV (Tiscali or BT Vision). 4oD seeks to develop a mixed economy of advertising and viewing tariffs, which range from pay-per-view opportunities to a "download to own" option.



- Cynics might argue that everything mainstream broadcasters do in this space is defensive - and that it's in their interests for video-on-demand to remain a peripheral phenomenon. It's certainly not in their interests to see most people, as the Tiscali research has it, watching most of the TV outside of the broadcast stream. Or indeed on devices other than TV sets.

- Interestingly, despite their seeming enthusiasm for new delivery systems, the mainstream broadcasters tend to argue that video-on-demand, in its crudest form, has been with us since the arrival of the first reasonably priced VCRs - and if the market has learned anything in the intervening decades, it's that, although the great British public may be enthusiastic in its willingness to adopt new technology, it has a limited appetite for time-shifted TV. We'll see.


- Meanwhile, the evolution of new advertising models in the on-demand environment will surely be followed with interest by advertisers and agencies. And, yes, the numbers are small (the BBC's 3.5 million figure is, after all, just a decent audience for a BBC2 show), but interesting nonetheless. And who knows, this audience could really grow.