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

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
bbc.co.uk - 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 itv.com 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.

WHAT IT MEANS FOR ...

MAINSTREAM BROADCASTERS

- 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.

ADVERTISERS

- 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.