01 May 2007

To YouTube or not to YouTube? That's a question occupying the strategy sessions of content providers and broadcasters alike. Most of them already have promotional clips on various high-traffic sites - including YouTube - while the number of branded offers from broadcasters and studios alike are growing like wildfire.

The rush to internet television is on, driven by the fact that the internet is increasingly where the audience is to be found, not to mention the advertising. Internet advertising in the UK in 2006 broke the £2bn (€2.9bn) mark, making it bigger than the advertising taken by UK newspapers last year. Perhaps the most stunning related statistic is that net ads grew by 41% between 2005 and 2006, with no signs of slowing this year. There is a reason that Google spent US$3.1bn (€2.3bn) for internet advertising agency DoubleClick in April and why Yahoo! laid out US$680m soon after for another online agency Right Media.

With broadband penetration in major territories reaching the mass-market level, there is even talk about delivering prime-time TV over the internet.

OK, the fragmented nature of the internet means that broadcast TV is far from dead, but it is going to face increasing competition from both new and library shows as well as user-generated content that is available on the web.

Certainly one of the biggest events at the recent MIP TV market in Cannes was about the launch of Joost, the online TV venture from the founders of Skype. Nascent service Babelgum, backed by the founder of Italy's Fastweb, Silvio Scaglia, had a huge banner on the front of the Palais declaring "Let's Build Up Together a Global Internet TV Business" and the Italians served up director Spike Lee - and some of his non-commerical short films - as a key feature at its glamorous launch party. "I'm prolific so I'm not worried about having material on Babelgum," Lee said when asked if had given his short films to Babelgum exclusively.

Companies such as Joost are piling into the new net frontier, even against more established rivals such as peer-to-peer video sharing site BitTorrent (now gone legit with agreements inked with nearly all the major studios), and sites from big broadcasters like RTL Group and ProSiebenSat.1. But the online video space is still dominated by the internet video pioneers YouTube and MySpace.

Although MySpace started as a social networking site where people could find "friends" and share pictures and music, since its purchase by News Corp the site has had more professionally-made video content added.

And it's not just content from News Corp. In late May, Sony announced its Minisode Network (that is the name - I am not kidding) where its back catalogue - Starsky and Hutch, Charlie's Angels and the like - have been re-tooled for a new ad-supported "network" set to launch this summer on MySpace. Sony seemingly has teams of people cutting down the hour-long shows to between three to five minutes each (which doesn't say much for the complexity of the original stories). The president of Sony Picture Television, Steve Mosko, said that Sony thought the Minisode Network is "the way to apply the logic of YouTube viewing to scripted drama" in a "fun and interesting" way.

Meanwhile, Google, through its YouTube service, where virtual viral voyeurism was born, has been busy expanding its remit, signing up TV broadcasters to its branded channel service, essentially giving broadcasters from Al-Jazeera English and CBS in the US to Portuguese pubcaster RTP TV and Antena 3 in Spain the ability to offer clips of their shows and also blog-space and other interactive services. Chelsea FC has a very active blog site as well as news about the club and archive footage. Google says that the branded channels let broadcasters reach whole new audiences.

But the YouTube approach has not being embraced by BSkyB in the UK, which with its Sky Anytime services on the net and mobile is hoping to let its subscribers have the flexibility of watching content where and when they want it - but always in a Sky-controlled environment. A year after launch in January 2006, Sky announced the millionth movie download and now says that it has "hundreds of thousands" of users. As a pay-TV operator Sky is using the service to retain customers, offering it as a "free" service to its subscribers. Now Sky is testing a user-generated content site called Skycast, which is hopes it will attract the kind of content it can then feed into some of its TV channels as well.

This is a view that has also been absorbed by commercial UK broadcaster ITV, which finally re-launched its itv.com website this month with live, ad-supported streaming of its TV channels as well as 30-day TV catch-up and archive services. Michael Grade, chairman and CEO, said ITV was not going to make the same mistake as the record companies did with iTunes, and hand control of pricing and distribution to a third party.