Media: All about ... The launch of BT Vision

Things are obviously more complex these days as BT diversifies in the
face of increased competition in its core telephony area. Its latest
move is into the television market with the launch of BT Vision. It is
expected to be unleashed in September although an exact date has not yet
been confirmed.

The service will offer subscribers a set-top box that will combine a
basic Freeview package with a more advanced internet protocol TV service
that BT argues offers more advanced interactivity than rival offerings.
BT has been talking up the interactive nature of the service. Ben
Verwaayen, its chief executive, has claimed the service is not a direct
rival to Sky because it offers a more personal experience.

BT Vision's content will combine digital TV with on-demand films via a
broadband connection as well as music and radio. BT's set-top box will
also provide a personal video recorder service.

It is set to get out into the market and talk to advertisers about BT
Vision and its big sell will be interactivity around content. Paul
Longhurst, the media consultant who has worked with BT on projects,
says: "It will be a specific sell about involving advertisers more
closely with content."

Critics argue BT will struggle to turn a profit with the service, with
some analysts estimating that it will have just 800,000 subscribers by
2010. Compare this with Sky's target of ten million.

BT is serious though and has invested millions in management with
broadcast experience and content deals with Hollywood studios and
production companies.

1Dan Marks, the chief executive of BT Vision, joined BT from Universal
Studio Networks. He appointed Antony Carbonari, a senior Disney
executive, as the director of interactive and commercial media in
February. At the time, Marks said that the appointment "underlines BT's
commitment to building a world-class television service staffed by the
most talented team of entertainment professionals". Part of Carbonari's
task is to build a commercial operation to sell BT Vision to
advertisers.

2BT Vision has struck a series of content deals with the likes of
Paramount, Warner Music, the UK film distributor Momentum, the BBC and
Endemol to provide programming for its on-demand service. The most
recent deal was struck last week with Universal Pictures. Films will be
available to BT Vision subscribers on the same date as the UK DVD
release.

3Carbonari is busily building a commercial team. Last week, he hired
Jeremy Rosenberg, the online manager at ITV Sales, as its advertising
and sponsorship manager. Rosenberg's task will be to sell IPTV
advertising for BT Vision, which could include interactive "red button"
advertising and, eventually, dedicated advertiser channels. Carbonari
says BT Vision will have an in-house team and also that some commercial
deals will have been struck by content providers with advertisers. "We
have no intention of building a massive sales force, but who knows in
the future," he says.

4As well as boosting Freeview viewing, BT Vision's main offer for
advertisers is likely to focus on two main models: selling dedicated
advertiser locations and attempting to build dedicated advertiser
channels. Carbonari argues that BT Vision's IPTV system will make
accessing DALs more of a satisfying experience than is currently
available. "We're looking at DAL providers and will offer a template to
make it easy for an advertiser to buy a DAL. The beauty is that the user
experience will be fast - a lot of DALs are clunky but we hope our
interaction and response rates will be higher."

BT Vision is also keen to push the DAC model further than it has been
taken by the likes of the Audi Channel on Sky Digital. Carbonari
comments: "The beauty is we can have content with full navigation and on
demand, viewers won't have to wait for a time slot to come around. We'll
eventually have a significant number of DACs - for cars, you'll be able
to search by model, and for a financial company, by specific products.
The opportunities are endless and this is the beauty of this
platform."

However, critics argue that it offers little beyond what is already
available on advertisers' websites.
WHAT IT MEANS FOR ...

ADVERTISERS

- BT Vision will offer a range of activity from sponsorship of on-demand
programming, interactive ads around programming and advertiser
channels.

- BT imagines that the service will be most useful to advertisers who
can enhance the viewer's entertainment experience - such as fast-food
companies who can offer a tailored direct ordering service or
audiovisual companies who can show off the capabilities of their latest
products.

- Carbonari says: "We can combine the powers and branding attributes of
the 30-second spot with the targeting and response rates of the
web."

- Because BT is a new entrant to the broadcasting market and because Sky
and Freeview are so well established, critics suggest that BT Vision
will struggle to build a mass audience for its platform. However, this
won't worry advertisers wanting to target a niche demographic or viewers
in particular homes or regions.

- BT is yet to market the service heavily to the industry. Toby Hack,
the head of OMDtvi, says: "I'm not aware that they've taken it around
the market. However, I suspect a brand the size of BT will do everything
possible to get the offering right."

BROADCASTERS

- BT argues that BT Vision will not be positioned as a direct rival to
Sky. However, its claims for greater interactivity will have other
broadcasters watching with interest.

- The launch could be a catalyst for faster development of interactive
advertising generally with other broadcasters launching more
sophisticated packages to compete with BT.