VOD not in demand in U.K.

Auds for longform content are low

LONDON — The recent purchase of struggling U.K. online video-on-demand upstart SeeSaw by a consortium led by Criterion, the U.S. merchant bank that owns social networking outfit Bebo, admittedly for a reported knockoff price of £10 million ($16 million), shows that some investors remain hopeful that Web-based TV can deliver audiences and advertisers in the crowded British market.

Transmission firm Arqiva, which bowed the service last year, had originally planned to shutter Seesaw last month, but will now retain a 25% stake.

Yet while shortform content, especially user-generated clips, have ensured that YouTube is a global destination for the under-35s, young audiences in the U.K. have largely proved resistant to watching longer content, such as TV shows and movies, online.

The jury is still out on the fate of such offerings in Blighty.

With a robust pay TV sector and new confidence among traditional terrestrial players like ITV and Channel 5, online ventures showcasing longform video content are continuing to struggle.

New research, conducted by global entertainment consultancy Attentional, makes uncomfortable reading for those who have invested in online VOD ventures.

Research shows that during the last 15 months, the amount of video consumed via PCs and laptops in the U.K. has failed to grow.

TV catch-up services, hailed as the holy grail of online viewing via sites like the BBC iPlayer, Channel 4’s 4OD and ITV.com, account for just 48 seconds of watching a day. By comparison, the viewing level for porn is a sizable 11 minutes a day in Blighty.

For more mainstream and family-friendly platforms such as YouView (backed by the BBC, ITV and British Telecom), which is due to bow next year, the cash cow that VOD once represented is beginning to resemble fool’s gold.

“There is a lot of confusion about the consumption of video content on the Internet,” says Attentional’s Farid El-Husseini. “There is no doubt that 16- to 24-year-olds are the heaviest consumers of Internet video. But young people probably still prefer watching TV on a nice big screen where the picture quality is so much better than it is on a laptop or PC.”

He estimates that Internet viewing flatlined at just over 550 million hours per month between January 2010 and the end of March. According to Attentional, this translates to a meager 19 minutes a day.

To put this into context, the average Brit spends three hours and 45 minutes a day watching broadcast TV, plus 18 minutes consuming recorded TV played back within seven days of transmission, according to the Broadcasters’ Audience Research Board, the bible of U.K. TV ratings data.

Using information provided by online measurement company comScore, Attentional estimated that 57% of Internet video viewing is devoted to porn, while 37.8% went to sites featuring videoclips and user-generated content like YouTube.

A mere 4.2% of the watching involved sites providing catch-up TV and other longform VOD content; the remaining 1.1% was taken up by music sites.

Even when viewing on mobile devices such as smartphones and tablets is taken into account, the U.K. consumption of online video is still tiny compared with the amount of time spent sitting on the couch and tuning in to TV: Only about 7% of the BBC iPlayer usage occurs on mobile phones and gizmos like the iPad, calculates Attentional.

For the much-hyped iPlayer, certain shows like “Doctor Who” do generate a lot of users. However, these are few and far between.

El-Husseini predicts growth in the online video market, but signals caution to VOD operators like Netflix, which is reportedly thinking of entering the U.K. sector.

“There is no doubt that the Internet is a paradigm-changing medium for the screen industry,” he observes. “However, we need to accurately gauge the nature and pace of change.”

El-Husseini does believe there will be growth in longform VOD viewing as technology improves.

“YouView may be a game changer,” he says. “But it is wrong to talk about the decline of linear TV as people migrate to watching TV online.”

El-Husseini believes linear TV will be a force for at least 10 years, with a gradual transition to other forms of viewing during that time. “It is more of an evolutionary model,” he says. “As yet, there is no sign of a tipping point.”