YouView, formerly Project Canvas, can't seem to get a break. It has been suffering an ongoing onslaught of complaints to Ofcom by various interested parties, primarily on grounds of competition, and now corporate finance firm Avista Partners has come out saying that it is destroying investment in online television in the UK.
According to Avista, in the 12 months before plans for the Internet television partnership between the BBC, ITV, Channel 4, TalkTalk, BT, Channel 5 and Arqiva, were unveiled, IPTV investment in the UK stood at about $35 million. This, said Avista, outside of investment from the partners, has plunged to just $400,000 in the past 12 months.
Avista compared the UK figures to the US, where in the 12 months before the YouView plans were announced, general TV investment was around $91 million, trebling to $274 million the following year; this as UK investment plummeted some 94% to $2.1 million over the same period. US online TV investment stands at $176 million in the past 12 months.
"The UK has witnessed a dramatic fall in private investment for IPTV-based businesses since Project Canvas was first announced," said Paul Heydon, Avista Partners Managing Director. "It is difficult to lay the blame on the economic crisis for this, especially when comparing the extreme buoyancy of US investments in this sector for the same period. It is clear the collective power of the companies behind Project Canvas is a major cause for concern for investors looking at private IPTV businesses in the UK."
YouView, unsurprisingly, disagrees with Avista, saying it should be considered a catalyst for investment in the UK and not the contrary. "There is plenty of evidence to confirm that YouView will enable growth in IPTV and encourage investment in all levels of the market from content providers and suppliers to device manufacturers," said a spokesperson.
"For example, a recent analysis by investment firm JP Morgan, cited that: 'YouView will improve video on demand, further broadband penetration, increase superfast broadband take-up, and will act to stimulate greater convergence between telecoms and TV.'
"In addition, BBC Trust research also indicates that YouView could accelerate growth in the market for connected TV devices alone by 70% by 2015. Add to this the growing proliferation of VOD suppliers and there are many strong signs that YouView will support a competitive market in the UK that will in turn drive investment.
"YouView is a much needed upgrade to DTT in the UK and critical to maintaining healthy competition and a choice of TV platforms. Without it, we will fail to offer an alternative to those people that currently cannot, or choose not to pay for TV services."
Meanwhile Electra Entertainment has filed the latest in a long series of complaints to Ofcom over, as most of the other complaints, anti-competitiveness and potential damage to the UK's interactive TV market.
"The joint venture's partners... are already dominant or major players in their respective fields and when combined, have the potential to form a cartel and market monopoly for the provision of next generation free-to-air and micro-pay television services," said Electra. "The majority of investment into YouView's software architecture and R&D is effectively state-aided, with funds supplied up-front by the BBC."
This follows last week's complaint to Ofcom from advertisers' trade body the ISBA, which said YouView could very well be seen as a "quasi-monopoly", and needed investigating.
Its Director of Media and Advertising Bob Wootton told Marketing Magazine that Ofcom must consider YouView because the only industry body to have examined it so far is the BBC Trust which is "insufficient" for a format which will carry advertising.
"ISBA campaigns for openness and transparency," he said. "It was founded on that tenet. Internet connected TV has new impacts for advertisers and we are not going to be bounced into anything that sets up a protective wall or quasi monopoly."
And just to kick a bit more sand in YouView's face, commercial law firm Beachcroft has predicted that YouView will need to rebrand, as it is likely to fall foul of YouTube's trademarks.
Intellectual Property Partner at the firm, Robin Fry, said, "YouTube have worldwide registrations, including in the UK, for a wide range of services and products including content, videos and pictures via the Internet and other communications and broadcast services. There's no doubt that the use of 'You' coupled with the unusual capitalised character in the middle of the word means that many consumers will think there's a connection between the two. The BBC consortium is playing a dangerous game by trading on YouTube's brand. It's a reckless decision to launch a major brand with the risk of an injunction from such an adversary as Google, YouTube's owners." Oh dear.
Whether or not YouView is as damaging as is being claimed, it is understandable why it is taking so much flak, particularly from the likes of Sky and Virgin who have both previously filed complaints. The number of IPTV subscribers worldwide increased by more than 2.3 million in the second quarter of this year to pass 38.5 million by the end of June, according to figures from Point Topic. The research firm said that that growth was in line with broadband growth, so the proportion of the world's broadband lines carrying IPTV has remained the same as in the first quarter of this year at 7.7%. People are becoming increasingly interested in IPTV, and a free option delivering a quality service is going to hit profit margins of the competition. Better to knock it down before it actually stands up.
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