A report by PricewaterhouseCoopers (PwC) suggests that consumers' growing appetite for Video On Demand (VOD) could lead to broadcasters losing a further £280 million from annual advertising revenues if they continue to focus their efforts on cost-cutting and fail to cash in on the boom.
Increasing VOD viewing is likely to reduce the advertising revenues that broadcasters such as ITV and C4 can demand for their linear digital TV channels.
VOD has enjoyed huge growth, driven by the success of the BBC's iPlayer, which allows viewers to catch up on BBC content online via a broadband connection or, via digital TV services such as Virgin Media, BT Vision and Freesat (which both offer digital TV customers access to BBC iPlayer), on the digital TV screens.
The better news for the broadcasters is that, according to a recent Nielsen survey, 39% of Europeans are prepared to watch some advertisements on VOD, if it means that they can have access to free content. This seems to apply to VOD viewed online via a broadband connection or VOD viewed via a broadband enabled digital TV service.
Virgin Media views VOD as a core element of its digital TV proposition. This is possible as its digital TV service is delivered via a fibre-optic broadband connection. Sky on the other hand does not have broadband-enabled set top boxes and cannot therefore provide Sky digital TV customers with a genuine VOD service via their digital TVs.
Instead Sky provides a "near video on demand" (NVOD) service by downloading content into the hard disk of the Sky+ and Sky+HD boxes for digital TV customers to watch. The range however is very limited relative to broadband connected VOD services.
If you would like help to compare digital TV and broadband packages, why not speak to the Simplifydigital impartial digital TV and broadband experts on 0800 1 388 388.