Watching television will never be the same again. Broadcasters are launching on-demand services over the internet and via cable, giving viewers the freedom to choose when they watch programmes.
But commercial broadcasters fear the BBC will use its subsidised might to dominate video-on-demand (VOD). They worry that BBC proposals for its iPlayer software offering its programmes free could damage innovation by rivals.
That view was bolstered last week by regulator Ofcom, which published the results of an investigation into the likely impact of the iPlayer launch – expected this spring – on the market.
Ofcom says the iPlayer could bring substantial public benefits as it allows people to download BBC programmes up to a week after broadcast. But it warns that plans to allow viewers to store programmes for up to 13 weeks and to view whole series within seven days of the last episode – series stacking – could distort the market.
Hitting where it hurts
The regulator believes these facilities would hit DVD rental sales as people would be tempted to stack up programmes, rather than hiring out a disc, and adds: "The storage window could have a significant impact on the future direction of VOD services and the way competition evolves." The final decision on what form the iPlayer should take will be made by the newly established BBC Trust, which this year replaced the BBC Board of Governors as regulator of the corporation.
The trust’s pronouncements on the iPlayer are likely to be its first significant decision. Will it simply roll over and give the BBC everything it wants, allowing the corporation to seize the initiative in VOD? Or will it take into account the concerns of commercial interests? First, it will have to assess the "public value" of the iPlayer, and Ofcom hopes its market impact assessment will help inform its decision. The trust publishes the provisional assessment this week.
One industry source agrees with Ofcom’s conclusion: "There is potential for a reduced incentive for commercial operators to invest and experiment in VOD if a publicly funded service was to create an audience expectation that downloaded content should always be available free, and access to such content should be available for lengthy periods of time." However, some observers doubt that the iPlayer as envisaged would damage the commercial sector. After all, commercial broadcasters are already streaking ahead with their own VOD services. ITV is launching a broadband service at the end of March allowing viewers to watch programmes free, 30 days after they have been broadcast.
Channel 4 launched 4oD before Christmas, allowing viewers to watch its programmes up to 30 days after broadcast. They pay 99p to rent a programme and £1.99 to own one, although some content will be offered free, funded by advertising. According to chief executive Andy Duncan, 4oD has had "millions of views" on cable, and has had "a high take-up with lots of repeat viewing through PCs".
Critics of the iPlayer proposals point out rival services do not offer 13-week storage or series stacking. The iPlayer’s storage facilities make it a uniquely powerful proposition. Universal McCann head of TV buying Richard Oliver warns that in a world where VOD is dominant, a free BBC service would make it hard for commercial rivals to launch successful series. "Commercial broadcasters would find it more difficult because they are asking people to pay for it," he says.
In reality though, licence-fee payers have already paid for BBC services. They may believe they have a right to choose when they watch or listen to the programmes they have been forced to fund.
The BBC Trust will arouse ill-will whatever its decision. If it knocks back series stacking and 13-week storage on the iPlayer, the trust may be accused of betraying licence-fee payers.
If it permits these facilities, a furious response from commercial rivals can be expected. Either way, it holds the future of VOD in its hands.