ITV Player's

FremantleMedia's Digital Britain Response



20. The prices we will be able to charge for on demand PPV for the great majority of TV programmes are likely to be much lower than the level at which PPV has been tried in the past. Traditionally, PPV has been used mostly for premium events at relatively high price points. This pricing strategy is unlikely to be successful for the vast majority of on demand programming:



i. The take-up rates for non-event PPV at price levels of £1.00 or above are small;



ii. In the broadband environment we will be competing in an international marketplace against material provided free to view, so price barriers must be low.



21. However, prices do not have to be more than a few pence/programme to make a significant contribution to programme economics. As Figure 6 shows (below), average revenue/viewer hour for the commercial terrestrial channels is only around 10p. Even programmes with the audiences most attractive to advertisers generate only a maximum of around 20p.

The Chief Executive of FremantleMedia , Tony Cohen, has received new support from one of ITV's Strategy Directors, Carolyn Fairbairn, with regards to charging consumers micropayments of around 5p to view individual TV shows online (e.g. viaVideo on Demand [VoD] service).However the micropayment idea itself is nothing new and was raised way back in March 2009 by FremantleMedia's submission to Lord Carter's Digital Britain report. Today's latest comments claim that people would be willing to pay anything from 5p right up to £2 for individual shows, although FremantleMedia's actual research hints at a top price of £1.FremantleMedia's original submission suggested that, when mixed in with advertising, a price point of just 5p per programme could be enough to compensate for any medium term reductions in advertising revenue. It also found that up to 49% would be willing to pay that amount to view drama or entertainment shows. By comparison the £2 figure received support from only 6%, £1 got up to 25%, 50p got up to 38%, 20p got up to 43% and 10p received approval by 46%.Presently most on demand viewing is available at no charge and offered as an extra service, albeit somewhat license fee funded in the case of the BBC's iPlayer service. This does rather raise the question of whether anybody would want to watch a show online via a micropayment system and yet still be forced to pay the license fee at the same time.Some broadband ISP users are also charged for what they consume, thus using the Internet to watch all your TV could quickly become an expensive endeavour.. at least until bandwidth charges get cheaper.