Kate Bulkley, Media Analyst.

Broadband is back

By Kate Bulkley

Cable & Satellite Europe

www.informamedia.com

01 July 2005

Broadband may have been a relative weakling in the media world till now, but it's been toning up and power is finally shifting away from old-style television. It's not that traditional TV simply needs another distribution outlet. Broadband is now the place for social networking, peer-to-peer file sharing, blogging and much more.

In the UK, broadband connections have reached 8.1m, or 30% of TV homes, and now outstrip narrowband connections. A recent study by the UK regulator Ofcom found the average British household spends roughly an hour less each week watching traditional TV (about 25 hours) than five years ago, but in the same period, time spent online rose from 18 minutes a week in 2000 to 3.7 hours in 2005. From a European perspective, internet usage from the home now tops 100m people each month, according to Nielsen/Net Ratings, and over half of those are surfing on a high-speed connection. Interestingly the biggest increase in broadband home use has occurred in the UK and Italy, says Nielsen/Net Ratings.

In July the BBC premiered a new series of its comedy The Mighty Boosh on broadband, a week ahead of airing the show on its digital TV channel BBC Three. The Beeb has recognised that broadband downloading gives the audience more choice about when and how they view content.

This is just the beginning. For a hint of what's coming to a broadband connection near you look at Nickelodeon's Turbo-Nick broadband video platform, launched this summer in the US, where online episodes of programming are up to 22 minutes long and advertisements run in a video player box directly after the first two episodes have been played whether the viewer wants them or not. So, the advertisers win because unlike with personal video recorders the ads are un-skippable and viewers win because the programming is free, not counting the cost of the internet connection itself.

The net has now caught the attention of the European Commission which has decided to look into regulating internet TV for taste and decency. The problem, of course, is that regulating the internet is a pipedream. If the commercial music companies had a hard time with the likes of Napster, Grokster et al, how will the bureaucrats fare? To underline just how out of touch the Commission can be with reality, its proposal is to revise the Television Without Frontiers directive, a poor starting place for a new delivery medium that does not act at all like traditional TV.

While the EU ponders the net, programmers and advertisers are moving toward it. Certainly the trend away from the 30-second TV spot is growing. Zenith Optimedia, a global seller of advertising space for companies, said in July that spending on TV advertising has peaked in two of the world's most mature markets, the US and the UK. In its forecast for 2006 global ad spend, Zenith trimmed $3.6bn (€3bn) off traditional media in the US, led by TV, and added $1.2bn to its internet predictions or an 8% rise in spending on net ads in the US to $16.4bn in 2006. Meanwhile, global spending on TV is expected to fall by $2.3bn to $148.2bn next year.

In a further sign of the way things are going, Rupert Murdoch has now re-embraced the internet (after a few bad calls during the late 1990s) with his recent purchase of Los Angeles-based Intermix Media for $580m. Intermix owns MySpace.com, a place where young people gather to share their love of rock music. This is not a broadcast model delivered on the net with interactivity thrown in. MySpace.com is more a peer-to-peer site, more interactive than passive. It's part of a new, fast-developing sector of the web where the users define and contribute most of the content and blogging and online dating is the norm.

Murdoch is banking on recapturing the people who are tuning out of TV and newspapers and turning to MySpace. It's already the sixth most viewed site in the US behind Yahoo, eBay, MSN, Google and AOL, with 16m monthly users and featuring roughly 200,000 web pages created by musicians.

Murdoch is not alone in his new love of social networking sites: Yahoo plans to launch Yahoo 360 and Google has already launched its own social-network Orkut. The downside is that these kinds of sites are incredibly faddish - and the more institutionalised they get the less cool they become.

Murdoch and others hoping to tap into this new zeitgeist have to tread a fine line between leveraging an audience to advertisers and keeping the coolness intact. The bottom line is that a transfer of power is taking place: power once held by the broadcaster, distributor and supplier is now moving into the hands of the viewer, listener and consumer and the maturing of broadband is making this whole new world possible.

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