[Satellite News 10-21-09] The growing prominence of online TV and could have a huge impact on traditional forms of broadcasting, such as cable and satellite, attendees at the Streaming Media Europe show in London said.
    Prior to the show, it was announced that online advertising had overtaken TV advertising in the first half of the year in the United Kingdom for the first time.

This was revealed in a study done by the Internet Advertizing Bureau and PricewaterhouseCoopers. According to this report, in the first half of 2009, Internet advertizing grew by 4.6 percent to £1.75 billion ($2.87 billion), despite the entire advertizing sector contracting by 16.6 percent during the same period. Online is now the single largest advertizing medium in the U.K. This shows the growing prominence advertizers are placing on online advertizing, and should act as a warning for traditional broadcasters.
    William Cooper, CEO, Informitv, says broadcast could even become a secondary medium in the not too distant future. “I think we have underestimated the speed of its arrival (online video). The opportunities for video over the Internet have been more disruptive than we imagined. The previous pre-eminent broadcast networks are being challenged. The conventional boundaries of telecommunications and broadcast will collapse. Viewers will benefit from more choice. The bigger picture is millions of homes being connected to broadband networks and be able to stream programs. Broadcast could become a secondary mass medium. Broadband video is a classic example of a disruptive technology,” he says.
    One of the main keynote speeches at the show came from Myles MacBean, VP and general manager, Disney Online, EMEA. He said that the Internet had created a new content medium for a broadcaster like Disney. He said, “Disney is beginning to realize that connected interactive media is a new medium in its own right. It takes the production qualities of the television with the interactivity of the Internet. It is all about being interactive. It is about connectivity and getting extra benefit for the service. The kids essentially have ‘My Content’. They have focused and well-defined needs.”
    MacBean said the “tipping point” has already been reached for broadcasters such as Disney. He said, “Media companies have woken up. It is (connected interactive media) a new medium in its own right. The only king in the new media world is the consumer. We want to create a new consumer destination. This is changing our eco-system, across device, content, aggregation and platform. We don’t see any single revenue stream being the nirvana of this convergent interactive media. We see ad-support content working, the ‘Fremium’ model, then subscription services in things like games and videos.”
    MacBean does not even think it can be called online TV anymore. “You need to get your thinking aligned with this new environment. I would not call it online anymore. We call it connected interactive media. We can be extremely complementary with on-air material. We want to integrate our approach with advertizers. You can sponsor things related to Hannah Montana, so onto the channel, the web, the whole package, for example. People are engaging with sub-brands,” he says.
Nicholas Wheeler, managing director, ITN On, a major news channel provider in the U.K., admits things are now more complicated for broadcasters. “Life has become more complicated. Revenues from advertizing are not large enough alongside free content. We are trying to generate revenues from diversifying our business models,” he says.
    One of the main talking points at the show was also the impact of Over-The-Top (OTT) TV. OTT TV is the delivery of TV over the Internet, and in theory this could put added pressure on satellite and cable pay-TV operators. One of the keys could be when this content reaches the TV, rather than just the PC. “I don’t think it will be too long until OTT content reaches the TV,” says Jon Haley, VP business development, web TV/OTT, Edgeware.
   For some telcos, an effective OTT TV strategy could be the key to their success. eircom, the main telco, in Ireland is yet to launch IPTV services, and with BSkyB and UPC already holding strong positions in the premium pay-TV market, OTT TV could be a key part of its strategy going forward. Richard Griffiths, director of TV & entertainment, eircom, says the company could look for partnerships with OTT TV providers. “We would have the Irish DTT as our core offering and some OTT stuff that makes sense. Then you might have enough to get Minimum Revenue Guarantees (MRGs) for movies. My idea is that telcos should enable OTT providers such as Lovefilm, Hulu, TV2moro, to get to the TV,” he says.
    Griffiths believes telcos that have left it late to get into the TV market, have no choice but to go with this kind of strategy. “Telcos are split into two in my experience. You have the telco that have made it their mantra they are going to become a major entertainment provider. They have spent heavily on content. Someone like Belgacom has acquired local football rights in Belgium, for example. That first wave of telcos deals directly with the content rights owners. A second wave of telcos who are going into TV because they have too. We have to include ourselves in that. The telco’s role is to enable this content. I would say OTT TV is part of this long tail of content. We want to achieve a service that give us a credible position in the market.”
    Andrew Burke, CEO, Amino Technologies, and a former BT exec, says telcos need to become retailers, particularly when bringing OTT TV to their customer base. “The economics must be you take as much as you can from as many sources as you can. Telcos would become a retailer. It is a completely new business model today. OTT is beginning to appear. My argument is you need a center of gravity. We see some OTT being integrated into IPTV. BT has learned a lot. It is whether they can be agile, and whether they can get the best of OTT.”
    Burke believes standards issues still need to be resolved here, as they are holding OTT TV back. “Where the Wild West is for OTT is standards, is it Adobe Flash, Silverlight etc? It is chaos out there. You have OTT failures such as Joost who failed because they did not have critical mass on content,” he says.