Video-on-demand succeeds for broadcasters, for now
By Paul Sandle - Analysis
LONDON (Reuters) - Video-on-demand was seen as another threat to broadcasters reeling from slumping ad revenues and fragmenting audiences but has been something of a savior, at least in the short term.
ITV (ITV.L), Britain's top free-to-air commercial broadcaster, makes more money per viewer streaming talent show 'The X-Factor' to computers than broadcasting it into homes.
"We are hugely pleased with the numbers for ITV.com on revenue," ITV's director of online content Ben McOwen Wilson said at the Edinburgh Television Festival.
"We get 8 pence per hour on TV. Online, we are getting more than that."
Dan Cryan, broadband analyst at Screen Digest, says ITV will make 34 million pounds ($56 million) from online this year, up from 8.9 million in 2008, and will reach 75.3 million by 2013.
"ITV is succeeding in selling programs stuffed with ads," he said. "They are genuine world leaders -- in the United States ad loads are significantly lower.
"At the moment ad prices are sustained by scarcity."
Online was also attracting new money, Cryan said. "There's some evidence that not all ad spend is coming from traditional ad budgets: they are growing the pie.
"And when audiences are fragmenting you're better off cannibalizing yourself."
Simon Nelson, controller of multiplatform and portfolio at the BBC TBBC.UL, said the publicly-funded broadcaster's iPlayer catch-up service had made a big impact, but it did not mark the end of broadcast TV.
"Live viewing is stable, and is even going up a little bit,' he said. "iPlayer hasn't changed things as radically as some might have expected."
Online television was constrained by slow broadband speeds and small screens on PCs and mobile devices, he said.
On demand totaled 5 percent of viewing, including services from Virgin Media (VMED.O) and BSkyB (BSY.L), he said, with the majority watched within 24 hours of broadcast.
"70 percent of all viewing is in the catch-up window and 30 percent is in the long-tail," he said.
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