The British are coming

Weak Euro Web invasion nonetheless hits some marks

LONDON — The message has come in loud and clear: European investors, advertisers and consumers are wary of the Web.

The problem for every player, old and new, is how to make an untried medium pay off in a cynical business climate.

Europe’s established broadcasters and producers are backed by traditional revenue streams, and most of the old guard’s Web presence is ancillary to regular programming, not a stand-alone product.

It is the outfits specific to the Web that are the big gamblers.

“These are guys that are doing something between positioning and having fun,” says Miles Saltiel, director of technology research at WestLB Panmuir, an analyst firm. “Only those with the deepest pockets and top-end product will survive.”

The wildest leap of faith must be London-based Network of the World (www.now.com), the flagship venture from Hong Kong billionaire Richard Li’s Pacific Century Cyberworks.

The so-called converged Internet and TV network is the vision of Michael Johnson, who also set up Li’s Asian satcaster Star TV, sold in 1993 to Rupert Murdoch at a healthy profit.

NOW’s budget is a whopping $1.5 billion over the next three years.

In theory, high-speed Internet will make Webcasting competitive to conventional television. But broadband is expensive to build, expensive to buy and just beginning to roll out in Europe.

In the meantime, Johnson says he is seeking conventional TV carriage for NOW’s output in virtually every market worldwide.

A far more modest take on building a Web entertainment business, but one that is generating buzz, is the U.K’s Interactive Motion Picture Corporation (www.itsyourmovie.com).

IMP, founded by former film critic Simon Rose, launched in the spring on a Spartan budget of $1.8 million for its first year. Its first effort, the interactive thriller “Running Time,” quickly became an Internet hit.

The series was created by Simon Beaufoy, who penned “The Full Monty.” It received about 1 million hits in May, and 45% of the viewer-participants were American. The full 70 minutes is now under consideration for conventional TV broadcast in Britain.

Next from IMP is the sitcom “Get A Life, Harry,” for which every aspect of the lead character’s life is currently being voted on and decided by Internet users.

The rest of the Continent isn’t as sexy.

Definitely ahead in the game is France’s CanalWeb (www.canalweb.net). Its 100 or so French-lingo specialist TV shows-cum-channels cater to everyone from chess players to pet fish lovers to Parisians gambling on horses.

Since setting up operations in 1998, CanalWeb founder and president Jacques Rosselin has raised $25 million in private equity.

The intention is to expand CanalWeb across Europe. First will come a Spanish service based in Barcelona, due in October.

Sweden, a world leader when it comes to infrastructure, should reach 10% broadband penetration by the end of the year, according to researcher Jupiter Communications.

That is considered a positive figure, but it does indicate how steep a hill there is to climb.

It is also worth noting that projections are often unrealistic. Swedish broadband cable company Bredebolaget has said it will have one million subscribers by year’s end (hard to believe considering analysts put the current figure at 15,000.)

And although creating Internet programming can be incredibly cheap — advertisers are not interested in associating with B grade material. For its part, subscription is a long way from proving a significant source of cash.

Another problem is that as broadband grows, so too will the involvement of the big boys. In the U.K., for example, cabler NTL and telco BT plan to both create and acquire content for their broadband platforms.

“They’re going to have to sort out their distribution if they want to be successful,” says Paul Zwillenberg, exec VP and managing director for Europe at production company KPE. “The power is with the distributors.”

Zwillenberg also points out that while it’s still “the earliest minutes of the earliest days,” European broadcasters appear more committed to broadband than their American counterparts: Europe came second to the Internet after the U.S., but because of that broadcasters realized they had to be a part of it from the very beginning.

Other Web companies are relying on traditional content to get the ball rolling.

Sweden’s Kamera Interactive provides TV clips to Web sites, and has a hand in almost everything to do with new media in the Swedish market. For example, the company helped create the online version of TV3’s reality show “The Bar.” Like “Big Brother,” the show connected with a different demographic on the Web.

Meanwhile, London-based Article27 (www.article27.com) intends to Webcast feature films when broadband take-up makes it worth doing.

But the company’s current reality falls far short of that goal. At present, it is only offering made-to-order cassettes and DVDs of its 200 alternative titles.

The hope, however, is that ultimately movies like “Aimee & Jaguar,” “Ghengis Blues” and “Acid House” — which had difficulty finding theatrical distribution — will find a new audience on the Web.

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