BBC Rolls Out AIR iPlayer, Ditches Kontiki P2P, Proposes Tiered Broadband Services

iplayer-airThe BBC has just rolled out a new desktop version of its popular iPlayer service based on Adobe’s AIR platform. The new client is available for UK residents as part of the BBC iPlayer Labs beta test, and it will be released to the public some time next year. BBC’s iPlayer client previously only offered downloadable content for Windows PCs. The new client will also be available for Mac and Linux users.

The launch of the new client is a big blow for the Sunnyvale, Calif.-based content delivery service startup Kontiki, whose P2P technology powered previous iPlayer versions. Beep Online media exec Anthony Rose cited falling broadband prices as a reason to shift away from P2P. But the move could also be part of a new approach to appease local ISPs that are increasingly voicing concerns about the growing iPlayer bandwidth footprint.

The original incarnation of the BBC’s iPlayer was based on a combination of Windows Media DRM and Kontiki’s P2P delivery technology. However, the broadcaster has been de-emphasizing this client in recent years and instead focused on its web-based iPlayer streaming platform, as well as device-specific solutions for the iPhone, the Nintendo Wii and set-top boxes. The approach seemed to pay off: The Beeb’s Richard Titus recently told Om over at GigaOM that some 300,000 people use the iPlayer every single day, and Rose revealed in a separate interview (PDF) that the iPlayer was causing 100TB of streaming traffic per day as of August of 2008.

The big loser in this is obviously Kontiki, which has already been struggling to remain relevant. Kontiki was bought by Verisign in 2006 for nearly $62 million, and was subsequently sold for a mere $1 million plus some shares this May, after booking only $6 million in revenues in 2007. Kontiki President Eric Armstrong told us back then that his company had a “very strong” relationship with the BBC, and the company continued to refer to the BBC as one of its primary customers as recently as three months ago.

Kontiki’s Director of Marketing Bill Wishon declined to comment on the impact the BBC’s decision will have on his company, but told us that Kontiki is “adding more customers each quarter”. However, the BBC’s departure leaves Kontiki with only three major broadcasting customers, and its unclear how long the company will be able to retain them. British broadcaster Sky recently launched its own Silverlight platform, and local competitor Channel 4 actually got offered a chance to adopt the BBC’s iPlayer technology, according to the Guardian.

So why did the BBC ditch Kontiki? Because its P2P technology simply wasn’t needed anymore.  “[O]ver the past year the cost of bandwidth has decreased by 90 percent, making direct HTTP downloads a viable alternative,” Rose explained in a blog post last week. He also mentioned that P2P caused problems for UK users withISP-imposed bandwidth caps, but admitted that those caps could spell trouble for users of the new client, as well.

That admission points to a bigger problem: The iPlayer’s success has caught many British ISPs by surprise. The service drove almost 20 percent of all UK broadband traffic during the Olympics, and some are already calling for the Beeb to pay ISPs to deliver its content. The broadcaster initially shrugged off such comments, but it now seems to be willing to engage with ISPs and offer them some incentives.

Rose recently stated, in an interview with a representative from the European Broadcasters Union (PDF, via), that the iPlayer could function as a way to upsell customers on tiered broadband services. The BBC is currently streaming with up to 800kpbs, but 1.5Mbit streams and downloads are planned for the future.

“(W)e could introduce a new scalable business model.  For example, the user can get a good quality iPlayer service for, say, £10 a month but for £20, a much better iPlayer quality would be available,” he explained. iPlayer users would be willing to pay higher prices to ISPs that could offer higher-quality streams. “This can lead to win-win situations, and ISPs will see video services as a profit centre rather than a cost burden,” he continued.

Rose also explained that the BBC was working on shifting downloads to off-peak hours in an effort to make the iPlayer more ISP-friendly. He did not, however, rule out that the BBC could utilize P2P for streaming in the future.

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