There’s a lot riding on YouView. BBC director general Mark Thompson has described it as nothing less than the “battle for the living room” – pitching YouView as an “open” platform based around the legacy free-to-air public service broadcasters, against the barbarians of the pay-TV world and their “closed” platforms.
You can see what he means. YouView – and the on-demand functionality it offers (such as an EPG that allows you to go back in time as well as forwards, to deliver iPlayer-style catchup on your TV) – will “change the way you view TV for ever”, it’s claimed. If that were to happen and consumers come to expect and then demand such services, the legacy PSBs would be seriously disadvantaged without their own platform. Or so the argument goes.
Actually underlying those arguments is a pretty straightforward attempt to find an upgrade path for Freeview. Freeview is already falling behind cable and satellite services because limited bandwidth means it can’t deliver anything like as much HD TV. As Virgin and Sky pour investment into next generation internet-enhanced TV, the fear is that without YouView Freeview will fall even further behind. What does that matter to the BBC, ITV (LSE: ITV), Channel 4 and Channel 5? Because they get substantially higher viewing shares in Freeview homes than in Sky or Virgin households. So you can see why, irrespective of whether it really does revolutionise viewing habits, they see YouView as quite so significant.
For the other key shareholders – principally the internet service providers BT (NYSE: BT) and TalkTalk – there is almost as much at stake. BT has spent a reported £800m on BT Vision, and it does now work and thanks to Ofcom does now have premium sport – but to say it has failed to meet expectations rather understates the case. BT desperately needs a good TV offering if it is to ward off the threat posed by Sky and Virgin, which can already offer customers so called “triple play” (TV, telephone and internet). For BT and TalkTalk, YouView – with all its high-quality BBC, Channel 4 and ITV content plus other on-demand options – is their fast track to a compelling “triple play” offer.
Which makes the fact that as you read this there is not (and never has been) a working YouView box something of a worry. Originally set to launch early in 2010, then promised to be in the shops by Christmas, then first quarter 2011, then second half 2011 and as of two weeks ago “sometime” in 2012, YouView has become an embarrassment for the BBC – which has done most of the technical development work – and a real concern for all the shareholders who fear losing what could have been a Freeview-style market position in online TV.
Commercial shareholders have been irked by what they perceive to be a lack of “commercial acumen” on the BBC’s part. The tendency to over-specify the potential capabilities of the system has led to huge technical problems – which ultimately explain why it doesn’t yet work. A picture emerges of a project run by BBC boffins (who, according to one insider, have no concept of the kind of consumer marketing focus that commercial operations depend on) spending huge amounts of money trying to create an all-singing, all-dancing box that would win its creators significant recognition in the digital media world outside. When all the shareholders really wanted was an enhanced TV catchup service with some extra on-demand and pay TV services thrown in.
All the talk now is of “de-specifying” the box in an effort to make it work and get it to market for the Olympics in 2012. In the meantime Richard Desmond has sent his friend Lord Sugar in to “kick the tyres” of the unfunctioning box; the “drop dead” clause in the shareholders’ agreement (allowing them to walk away from the project if it is not launched by then) is due to run out at the end of 2011 and is being hastily renegotiated; and YouView’s popular chief executive Richard Halton is surviving, but under pressure.
In normal circumstances this might look like a project on the verge of collapse, but that is very unlikely to happen. Why? Because the UK’s internet infrastructure is not yet capable of delivering YouView-like services as widely as would be necessary to make real market impact – for YouView or anybody else. And because evidence so far suggests relatively limited consumer demand for internet-enabled TV. In other words, the delay to YouView’s launch probably won’t be as damaging as it might have been. More by luck than judgment.
This article originally appeared in MediaGuardian.