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The VOD Era: Can Broadcasters Adapt?
Video-on-demand throws up some serious challenges to broadcasters. What trends are emerging and what business models will help them survive, asks Michael Nutley...
Video-on-demand throws up some serious challenges to
broadcasters. What trends are emerging and what business models
will help them survive?
By Michael Nutley of
[Register and post your own comments
on this article below...]
One of the developing trends in the world of interactive TV is
video-on-demand. It’s been a long time coming, but cable
networks Home Choice, NTL and Telewest are all rolling out
services over the next few months. Meanwhile the BBC is
developing its media player with the aim of offering an
on-demand archive of its TV programming in the same way as the
radio player currently does for its radio output. Even BT is
looking at a content play, with its current plans to wrap
on-demand video content around a Freeview offering.
And these are just the early stages. The UK already leads Europe
in illegal downloads of TV programmes. At the same time,
broadband penetration means illegal downloading of films is now
seen as a similar threat in Hollywood as music downloads have
been in the record industry. Meanwhile PVRs, which failed to
make a significant impact in the UK market initially, are
predicted to take a much bigger slice second time round, being
pushed as they are by both Sky and the big consumer electronics
firms. And while most of the controversy around PVRs has to date
focussed on the ability to skip ads, their ability to record
programmes, particularly when combined with DVD recording to
allow you to archive your favourite shows, is another vital
strand in the evolution of an on-demand culture.
Consumer control pushes forward
In other words, we’re seeing another example of what OgilvyOne
chairman and CEO of OgilvyOne worldwide, Brian Featherstonhaugh
recently called “the only trend that matters” – consumers taking
control of communications. Everywhere you look in media, you
find yourself facing the same set of issues: that whenever
consumers are offered tools that allow them to control a medium,
they seize them with enthusiasm. In journalism, it’s blogging
and RSS; in advertising it’s PVRs, pop-up blockers and the
telephone preference service; in broadcasting, it’s
video-on-demand. And in every case the big question is how to
make money in this new environment. Or rather, how can the
established companies continue to make money?
But there is another question to be asked here, and that is
whether technology is driving us up a blind alley. Or, to put it
more specifically, if you have the choice of watching
everything, will you ever actually watch anything?
Fragmentation versus community
Someone in the television industry put this question to me at
the recent launch of Herfordshire Creative Industries. He was
arguing from his experience, which I’m sure is familiar to most,
that he has shelves full of videocassettes of programmes that he
has taped, but never watches. The time never seems to be right,
or there’s something else on, or he doesn’t feel like watching
anything he’s got. And he was predicting a backlash against
video-on-demand, and a move back to event television, where what
matters is watching something live and discussing it next day
with friends or colleagues, who’d all watched it at the same
time.
Business models for the VOD era
To a certain extent this trend is already happening, as a
response to audience fragmentation caused by increasing numbers
of channels, and therefore consumer choice. Broadcasters believe
that sport is the “killer app” in this situation, the one thing
that has to be watched live to be truly enjoyed and appreciated.
Now, with reality television, there’s an increasing amount of
programming that aspires to the quality of sport.
It’s possible to imagine a future where video-on-demand has
driven most broadcasters to a model that looks more like retail,
with a strand of event programming running alongside. But if
video-on-demand turns out to be an illusion, and viewers are
paralysed by choice rather than liberated by it, will the
revenues from programme sales be enough to replace those lost
from advertising? Or will we see a shrinking in the number of
channels on offer to match the changed economics of
broadcasting.
Michael Nutley is the editor of
New Media
Age.
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