UK consulting group Coda Research Consultancy reckons that if over the web VoD initiatives are followed through in the UK, by 2015 some 28 million viewing hours of VoD per day will be consumed, around 4 times what is consumed today. This will result in a massive 15% drop in the viewing of broadcast TV, with a similar catastrophic result on broadcast advertising revenues. UK broadcasters are already under enormous pressure in the current recession, and many channels may not survive.
These VoD initiatives could also cut into the proliferation of DVRs across the UK, if they are allowed to go ahead and are not blocked by Government intervention. But Coda says they must go ahead, because web based VoD is one of the biggest advertising opportunities in years, and without it there will be nothing to replace the lost broadcast revenue.
The initiatives that Coda is referring to are the launch of Project Canvas, a set top which marries DVB-T based Freeview with internet delivered video; the launch in the UK of a Hulu type commercial online catch-up content aggregator (which was really what Project Kangaroo was all about, but which is now legally blocked) as well as the launch of an aggregated subscription based VOD film service which Coda also says is just around the corner. The UK already has a considerable amount of PC based VoD viewing based on the BBC’s catch up service, iPlayer.
Project Canvas is an effort by the BBC, ITV and British Telecom to build a cheap set top specification which will take internet content straight to the TV, and Coda is adamant that this will be opened to broader internet initiatives like YouTube and will not remain the playground of just the existing broadcasters.
The UK doesn’t have its own Amazon Video or Netflix online service, and the addition of this type of localized service is also expected by Coda.
If the all above occurs, Coda predicts a gradual transition in viewing
behaviour in the UK, which will result in the following by 2015
* VOD via TV consumption will increase four fold, from 7 million hours per day now, to 28 million hours
* VOD via PC/laptop consumption will increase four fold, from 5 million per day now, to 20 million
* Linear broadcast TV will see a decline of 15%, from around 190 million hours per day now, to 160 million
* VOD via TV and online will impact DVR viewing, which will increase
by only 30-40%, to 14 million hours a day, rather than at the breakneck speed is has been growing until now.
Although all of this will result in people watching more video ‘ with an overall increase in audio visual viewing of 3%, to 219 million hours per day
(across all platforms) this is good for the consumer, but not the rest of the TV community, because it will result in a big shift in advertising revenues ‘ with VoD advertising reaching £500 million ($690 million) and a linear broadcasting advertising fall of some 10% to just £2.86 billion ($4 billion)
Additionally Coda says that subscription revenues for a movie aggregation online and via TV will reach £192 million ($265 million)
The UK has tended to be a testbed for European wide DVB-T, digital terrestrial broadcasting initiatives, and the introduction of Canvas would almost certainly trigger device and service designs which would reach across all of Europe, parts of Asia and South America, where the whole experience is likely to be repeated, so these local decision will be far reaching.
Coda also found that UK internet users currently consume £1.3 billion ($1.8 billion) worth of illegally sourced video content per year, which is still set to continue. If the legal online video services are not pushed then broadcasting will lose its viewers to piracy instead.
‘Piracy will continue to increase despite warnings about prosecution, unless rights owners work closely with service providers to open up current and archive broadcast and movie video by way of aggregated services,’ said Steven Smith, Senior Director of Coda Research Consultancy
‘If Project Canvas passes and a commercial aggregator launches within the next 12 months, then overall ad revenues are set to increase. However, if these don’t launch, we forecast even greater reductions in TV ad revenues, and consumers will continue to be driven to illegal sources. The stakes are really high: either invest, draw up business, legal, rights and distribution models, and pass Project Canvas, or see revenues and audience decline dramatically, significantly threatening the sustainability of some current services.’
Coda is a behavioral research company, getting most of its research from interviewing consumers.
The report also provides insight into consumer future behavior around VoD services to TV, VoD to the PC and mobile devices, future linear TV behavior and how these will all mix together with implications for designers of Blu Ray players, DVRs, PS3s, X-Box and Wii and of course handsets. The report also covers the use of Yahoo! widgets and similar applications recently launched in the US and is available from http://www.codarc.co.uk