The BBC has received final approval to join a joint venture with three other broadcasters that will add a range of VOD, IPTV and internet services to UK TVs.
In partnership with ITV (LSE: ITV), Channel 4, Five, the ISPs TalkTalk and BT (NYSE: BT), plus infrastructure company Arqiva, Project Canvas has been nodded through by the BBC Trust to develop a suite of standards with which to develop a common user interface for set-top boxes and integrated TVs, providing an on-ramp to catch-up shows over broadband.
The system is set to unleash a new period of TV entertainment innovation because third parties like movie renter LoveFilm will be able to provide pay-for services over it, and Canvas has promised a Software Developers Kit, likely leading to a range of additional services, like Flickr and perhaps internet video; the BBC is using “apps” and “widgets” as analogies.
The JV was conceived by the BBC two years ago because it believes the oncoming VOD-over-IPTV boom will see several competing efforts, disenfranchising viewers, and because it wanted to offer VOD to pay-TV refuseniks. But it’s been opposed by dominant pay-TV platform Sky and by cable provider Virgin Media (NSDQ: VMED), whose platforms the BBC Trust acknowledges will be negatively impacted by Canvas. Sky thinks it will lose four percent of revenue as a result.
The trust is making the BBC’s participation conditional on six points, all of which the project had basically already committed to…
Most notably, to those who have been following the development: the core Canvas technical specs must be published within 20 days from now and final specs eight months before go-to-market. The BBC this month declined our Freedom Of Information request to publish the specs, preferring to reveal it only to TV industry stakeholders via the Digital TV Group. But the trust agrees the spec can be released on a “phased” basis.
The project is forecast to cost £115.6 million over five years, of which the BBC’s involvement is set at £24.7 million, but the corporation will be allowed to exceed this by 20 percent.
The necessity for Canvas may be debatable because we are already seeing TV-VOD initiatives from the likes of Google (NSDQ: GOOG), Samsung, Sony (NYSE: SNE), Yahoo (NSDQ: YHOO) and many others. It’s this proliferation the BBC wanted to harmonise, but Canvas has been awaiting regulatory approval for a year so boxes and Canvas-enabled TV sets will come to market relatively late…
And who will be making those boxes? The BBC has already been working with Humax, Thompson and Cisco (NSDQ: CSCO) on chip specs, but can home electronics manufacturers be persuaded to favour an alternative, UK-only standard over the connected-TV interfaces they have already been developing, like Sony Internet TV?
In its detailed final conclusions, the BBC Trust slaps down myriad complaints and concerns, including those about…
— A single user interface: “The UI makes the difference between simply making available services by means of IPTV and turning them into a compelling proposition that users will find easy to adopt. To this end the common UI should help consumers access broadband services in new ways, and help some users with accessibility needs gain regular access to broadband for the first time.”
— Negative impact on Sky: “It is still not clear to the Trust that the retail and/or wholesale of Sky content over DTT will not generate a net positive return for Sky as Sky will be able to generate revenues from a new segment of the market. ”
— Whether the impact will be more negative than the trust had projected: “The Trust has not been provided with persuasive evidence to suggest that Canvas will have a more marked impact on either Sky or Virgin than that set out in the analysis.”
— Increased bandwidth load on ISPs: “The Trust is surprised that any ISP would argue that there is a fundamental issue with supporting devices that grow demand for their product.”