Kate Bulkley, Media Analyst.

Coming to a computer near you: television

By Kate Bulkley

The Observer

Sunday July 16, 2006

BSkyB launches a package this week of broadband and on-demand TV programming - but the competition will be fierce, writes Kate Bulkley

Some of the biggest names in the British media are making significant moves into the brave new world of broadband television. And although watching TV on your PC is not going to replace the telly in the living room any time soon, players from Google to BSkyB, and from Channel 4 to independent producers such as Talkback Thames, are diving in.

Sky plans to increase its broadband programming offer and this week the company will unveil an offer via its recent purchase of broadband provider Easynet which, it says, will rival BT, NTL and Carphone Warehouse by bundling a high-speed connection with Sky content.

Meanwhile, last week the world's biggest search engine, Google, unveiled the UK version of its online library Google Video, which offers tens of thousands of choices, ranging from traditionally made TV shows and film clips to home-made amateur footage.

With more than 10 million UK homes connected to high-speed broadband (it will be 16 million by 2010), a critical mass of potential broadband TV viewers was reached earlier this year. Where the millennium started with a rush of music downloading, the latest online craze is now TV downloads.

In fact, the amount of TV already available online might shock the average telly viewer. The BBC premiered episodes of its hit comedy The Mighty Boosh online and put all its World Cup games online for free viewing; more than 1,000 sports clips and hundreds of Sky Movies films have been downloadable by Sky Premium subscribers from skybybroadband.com since January; Channel 4 has been streaming live Big Brother content for several years and its current US blockbusters Lost and Desperate Housewives are available for a 99p per-episode fee; and ITV is gearing up for a major online relaunch later this year including its newly acquired Friends Reunited site.

As programming becomes more accessible, it is not just the traditional broadcasters who have a desire to attract the new audience. Google and so-called social networking sites such as MySpace.com are just as likely to catch viewers' attention. A year ago News Corp acquired MySpace, which attracts more than 50 million online visits a month. Recently Disney created a special Pirates of the Caribbean page on the site offering the film's trailer. More than 70,000 fans logged on.

James Baker, managing director of Sky Networked Media, is one of the people trying to make sense of the new TV landscape and to work out how to make money from it. 'There is an interesting democratisation going on here with content on the web coming from all kinds of places. The big question for everyone is: What is people's propensity to pay? So the best thing to do is to get content up there on our site and let them explore,' he says.

Since January, Baker's BSkyB broadband programming offer has attracted 250,000 registrations and a million downloads. Elsewhere, the viewing numbers are equally impressive. On the BBC Sport site during the World Cup and Wimbledon, as many as 500,000 users per day were watching the live action online for free. Channel 4 reports tens of thousands of episodes of Lost and Desperate Housewives have already been seen via their website, some free and some paid for.

Channel 4 might have been an early leader in the broadband TV race, but Rod Henwood, the broadcaster's new business director, knows that many other companies are hot on his heels and they are not all his traditional rivals. 'There will be a lot of competition out there from Google Video to ITV to Sky and the BBC. Our move into on-demand broadband has defensive motivation. We want to be ready to get the broadband viewers as they come online,' he says.

But with the potential rush of new money from online TV viewers comes another life-threatening problem for UK broadcasters. A recently signed agreement with Pact (the organisation supporting the country's 800 independent TV producers in the UK) means that the new media rights to their programmes - including online, on-demand rights - revert to the independent producers after the initial TV broadcast and an online, on-demand 'catch-up' period of anywhere from seven to 30 days. So a broadcaster such as Channel 4, which commissions the vast majority of its schedule from independent producers, can quickly lose the right to make money from UK shows such as Wife Swap. This is why large indies such as Talkback Thames (makers of The Bill and Green Wing) and RDF (which makes Wife Swap and Faking It) are planning their own websites to sell their content directly to viewers for the first time.

'We need to start exploring how to exploit our rights in the online space,' says Debbie Manners, group commercial director of RDF. 'It's crazy to invest a lot of money in this at the moment but if you can do it at a reasonable cost and organically grow it, this is the right moment to get in. We should do it sooner rather than later because the business models will all emerge in the next 18 months.'

Alex Mahon, chief operating officer of Talkback Thames, is another who is excited by the online prospects: 'I don't think there is much mileage in an online site called Talkback or RDF, but there is in Wife Swap or Green Wing.' Mahon has a two-pronged online strategy - free clips from shows such as Bo Selecta will be offered on the new Google Video UK site launched last week and 200 hours of shows will be available for a fee from AOL and the online DVD rental site Love Films. 'The broadcasters won't necessarily be the most innovative in this new broadband world,' he says.

Even James Baker at BSkyB says he might put some of Sky's programmes on Google Video. 'Anyone can launch a broadband site for TV in this world,' he says. 'It's not about ownership of rights, it's about distributing content and working with partners and making it simple for the consumer. We're putting everything in place so that customers will have the ability to download and stream TV at faster speeds. It's the most exciting period the industry has gone through. It's a massive step-change for everybody.'


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