Television industry must act soon or face losing control of its online presence to brand such as Apple, says Highfield

The TV industry has as little as two years to create viable digital businesses or face a version of the "iTunes moment" that saw the music business cede the online future to Apple, according to Ashley Highfield.

Highfield, the the managing director of consumer and online at Microsoft UK, said he believed the reluctance advertisers feel to advertise on sites such as Facebook will soon be a "non-issue", putting more pressure on broadcasters' advertising revenues.

"Once this happens the shift of spending from TV to web will accelerate even more," he said, giving the Futureview address at the MediaGuardian Edinburgh International Television Festival today.

"So realistically I think the industry has about two to three years to adapt or face its iTunes moment. And it will take at least that long for media brands to build credible, truly digital brands. But, importantly, I do believe TV does have a small two to three year window in which to respond."

Highfield also said he believed that despite the growing popularity of online TV viewing it will be at least three years until it reaches a scale to win over media agency advertising buyers and generate significant revenues.

"The traditional television business has to aggressively move its content online, build a critical mass of content that the traditional buyers of airtime will understand and buy into," he added. "They want to see TV-like reach and impact".

Highfield argued that there are still barriers preventing online TV from generating revenue. "On current projections, we are three years away from the reach and the volume of online video being un-ignorably attractive to TV advertising buyers," he said. "We are two to three years away from having the ad sales systems and Barb-like measurement systems to enable really easy purchase across TV and web."

To drive revenues from web video, media companies need to embrace controversial targeted advertising techniques, such as behavioural targeting based on users' web viewing habits, with the ad inventory going into an auction-style model similar to the system Google operates, according to Highfield.

He also suggested a possible solution to the thorny issue of getting broadband into rural areas in the UK after Lord Carter's plan of a £6-a-year tax on landlines to raise the funds fell out of favour with new business minister Stephen Timms.

Highfield said a solution, which in the US market has been called the "white space initiative", would be to use the leftover unused transmission spectrum between, for instance, BBC1 and BBC2 to provide broadband capacity to rural communities.

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