ITV, the main commercial broadcaster in Britain, has confirmed its plans to introduce a payment mechanism to test the propensity of viewers to pay for online video programming. The plans were first announced a year ago, but will now not be rolled out until the end of 2011. Meanwhile, ITV is increasing its satellite capacity, having already made tentative moves back into pay television.
A year into a five-year transformation plan to refocus the business of ITV plc, the company acknowledges that it is still overly dependent on television spot advertising revenues. In the future it hopes that half of its revenues will come from sources other than advertising.
ITV has lagged behind the BBC and other broadcasters in extending its distribution online, but recently launched services for Apple and Android mobile devices and broadband enabled Freesat receivers, in addition to web users.
Online usage has now grown to 10.8 million unique monthly users, producing an average 30 million long-form views a month, up from around 18 million a month the previous year. That compares to around 5 million users a week of the BBC iPlayer producing around 160 million requests a month.
Online revenues increased by a third to £16 million over six months, which is a drop in the bucket compared to total revenues of a billion pounds and earnings up 45% to £240 million. It works out at about 25 pence per online viewer per month.
The performance of the ITV Player has been widely criticised in comparison to the BBC iPlayer. The company says it is investing in “fixing our online technology” and building scale in the online business. It plans to introduce a micropayment system from 2012.
“We’re investing in the quality and reach of our online offering,” said chief executive Adam Crozier, commenting on interim results for the first six months of the year. “We’re making ITV Player more widely available, most recently on Android and Apple devices and Freesat. We plan to have a pay mechanism in place around the turn of the year so that we can test what viewers are willing to pay for, and we continue to work with our partners on YouView, which is on track for launch early next year.”
Charging for access to ITV programming will be challenging, particularly if it still carries advertising. For 25 pence a month, some people might pay to avoid the adverts.
ITV generates around £5.70 per month from every television home in the United Kingdom. In other words, that is how much you would need to pay on a monthly subscription basis to receive all the ITV channels without any advertising or sponsorship. That works out at less than half the cost of the mandatory BBC television licence, which also funds BBC radio and online.
ITV has made tentative steps to return to a subscription strategy, which it abandoned with the ignominious end of ITV Digital, which went into administration in 2002. Its four main channels, ITV1, ITV2, ITV3 and ITV4 are all currently broadcast free-to-air, as is ITV1 in high-definition, although the high-definition versions of ITV2, ITV3 and ITV4 are currently only available to Sky subscribers.
ITV has extended its agreement with SES Astra for satellite carriage. It currently uses six transponders on Astra, serving both Sky and Freesat. Under the new agreement it will progressively activate a further three transponders.
Paul Dale, the chief technology officer of ITV said: “Continuing to exploit our content offer across platforms is a core part of ITV’s transformation plan and, in addition to renewing our existing capacity, this new agreement gives ITV additional flexibility for future development and growth on satellite.”