The Year in Review: Media & Entertainment
The iPlayer accounted for about 8% of total broadband traffic in the U.K., but with YouTube accounting for more than 17% of traffic, it looked as if the ISPs had gone for a soft target rather than the right one. Although no official solution has been agreed upon, with the BBC refusing to negotiate, the ISPs have appeared to reach the conclusion that blocking the full iPlayer service is something that would damage their service offering.
Across Europe, the use of IPTV as a differentiator for ISPs has led to a gradual increase in content deals throughout the year. The U.K.'s Five signed its first distribution deal with BT Vision in 2008, and similar content distribution deals were being signed all across Europe.
The Mobile Challenge Meanwhile, the continual expansion of video content onto new platforms both static and mobile was also mirrored in the iPlayer. The BBC has been proactive in bringing the service to more platforms and will by the end of the year have the iPlayer on a range of third-party platforms:
• Mobile phones, including Nokia N96 with more handsets to follow, the new Sony Walkman Phone series, and the iPhone
• The Virgin media cable platform, which now accounts for one-third of all viewings on the iPlayer platform
• Nintendo Wii
The PlayStation 3 has already been mentioned as a likely candidate for the next round of platform expansion. This model of the distribution of content over a wide variety of platforms is one which content holders all over Europe have been trying to emulate this year, yet again showing the BBC iPlayer as the leader of the pack.
Mobile platforms have seen a broadening of the offerings available with the GO!VIEW service being launched for the PSP to enable subscription or pay-per-view content on the move.
Vodafone, 3, T-Mobile, and Virgin Mobile launched services from a wide range of terrestrial and satellite TV channels. These services, which are available on virtually any 3G mobile phone, failed to find a significant audience in 2008. Now, questions are also being asked about the whole principle of mobile video, including the platform being used. In the summer, the BBC confirmed that a free mobile TV trial available to subscribers of Orange, Vodafone, T-Mobile, and 3 customers attracted fewer than 600 viewers per day, and it launched a public consultation to consider its next move.
Most European mobile TV services will now use the DVB-H (unlike the U.S. where Qualcomm's MediaFLO technology is the de facto standard) because it was adopted as a standard by the European Union in March of 2008.
So with a standard platform agreed upon, providers began to address the question of whether there was simply a lack of compelling content or if there was simply a lack of consumer desire to watch any video at all on mobiles. Considering the vast sums that most European providers paid for their 3G licenses, video was seen as an essential way to drive up revenue per consumer. However, with launches in Germany, Italy, and several other major European markets failing to gain momentum with consumers, is the demand simply not there?
“France will be the final litmus test for DVB-H,” predicted Alon Ironi, CEO and president at Siano Mobile. “If it doesn't make it big time there, I am not sure of DVB-H's future.”
According to M:Metrics, however, 3.1 million mobile phone subscribers in Germany and 4.2 million mobile phone subscribers in the U.K. used their phone to watch some kind of TV or video over the 3 months ending in August; not an insignificant number. And some mobile providers remain confident. Italian wireless provider 3 Italia announced in September that it would expand its 3-year-old mobile television offering with more equipment from Alcatel-Lucent.
Changing Viewer Desires
A survey by Forrester suggests that consumers' expectations for mobile TV have tailed off significantly, with interest in all types of mobile TV just more than half what it was in 2006. The majority of interest that remains is focused around watching live TV streams. An additional 15% of people said they'd like to record TV shows to be viewed later on mobile.
Once again, this area of development has been mirrored by the iPlayer, with live streaming of the BBC's main channels to mobile and online launched in November and the 7-day archive being the equivalent of recorded TV shows. This has led to controversy with members of the U.K.'s Parliament, and the press now views the BBC license fee as unenforceable.
The BBC's data on viewer demographics also gives other providers something to aim for, as it shows a relatively even split between age groups. Fifteen to 34 year olds account for 37% of viewers, 35-54 year olds account for 43%, and a further 21% of users are 55 or older. The BBC attributes this demographic split to the ease of use of the iPlayer itself.
Of course many content providers in Europe do not have the luxury of making all their offerings free to view. Despite this, many channels such as Arte in France offer a similar catch-up service to the BBC and have mixed into their offerings pay-per-view programming, which is used as a valuable revenue stream.
A shift in the distribution paradigm for traditional content owners was led by Sky, which is now offering live TV channels as online-only monthly subscriptions. The programming will be made available through the PC-only Sky Player service. “Essentially we are talking about taking a Sky subscription service and making it available online,” says Sky chief operating officer Mike Darcey. “You don't need a satellite dish, and you don't need to be a Sky subscriber. You can be a Sky subscriber online now.”
But the prospect of major TV providers aggregating their content was dealt a blow in the U.K. when the Competition Commission announced its preliminary findings in an investigation into Project Kangaroo-a joint venture between the BBC, ITV, and Channel 4 to establish a single platform for on-demand internet TV in the U.K. The Commission asked the broadcasters to comment on how they might "address the loss of competition and its adverse effects for viewers" after finding that the venture could “restrict competition.” Kangaroo was scheduled to launch in late 2008, but the participants will be given a chance to respond before a final ruling is made in February 2009. Rivals are naturally skeptical of Kangaroo: “It's not clear to me it needs to be done with the three of them together,” says Sky's Darcey. “As a group they are collectively able to set conditions for supply for a very significant proportion for their archive materials themselves. It's not clear what is gained by coming together.”
In conclusion, the year in Europe has shown massive growth in online viewing, but it has not been a universally rosy picture across the sector. Mobile content consumption has failed to take off in any meaningful way; and unless it scores some quick successes, it could fail almost before it has begun in earnest. But with platform holders rapidly diversifying their offerings online and with traditional nonvideo content owners developing and launching their own content and channels, the picture for growth in 2009 looks extremely positive.
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