ITV and digital television

By August 7, 2008 One Comment

ITV announced what were widely seen as disappointing results yesterday. Executive Chairmna Michael Grade said:

[This year] is turning out to be a much tougher first year of the five-year turnaround strategy than anyone predicted or could have predicted a year ago.

You can read the full commentry on the links above, but two things stood out for me.

Firstly – they pushed back their target of £150m from online from 2010 to 2012. That seems all wrong to me – why should that go backwards? The reason they give is regulatory delays with Kangaroo, but to this suggests they are somehow missing the point. Kangaroo may well end up being a wonderful destination site, but if I was Grade I wouldn’t be betting the digital farm on it. I would be pushing my content out via as many channels as possible, not least my own site. Now I’m guessing the terms of Kangaroo may make that difficult, but therein lies the rub.

Secondly – the notion of a public sector broadcaster with associated obligations is increasingly irrelevant. The trade off used to be ‘we will let you participate in the broadcast oligopoly at below market rates if in return you produce certain types of content that we require – national news, local news etc.’. As satellite, cable and now the web have opened up the market from 3-5 channels to infinity that oligopoly is fast becoming history – making obligations unmanageable. A point Grade made on Tuesday and reported here.

I have long felt that in the future there will only be two main constituents in the professionally produced video value chain – companies that create content and companies that help consumers find content. In the current world ITV fulfills both of those roles, and it might be that they are able to continue to do so in a world where all TV is distributed via the web – but I always prefer focused strategies and would think they have more chance of success concentrating on being content creators.

The search and discovery side of the equation is, I think, ripe for startups.