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UK's ITV to launch online pay strategy

The UK's commercial free-to-air (FTA) broadcaster ITV will enter the pay TV arena at the end of 2011 by charging for use of its online service, ITV Player. It remains to be seen though whether people will be willing to pay, with experience from elswehere including the U.S. suggesting that it is difficult to levy subscriptions for online services restricted to one source of content. While ITV itself is free to air, many of the target audience for its paid service currently already subscribe to one of the major UK pay TV operators, either Virgin Media or Sky, and obtain their ITV content as part of the package. They are unlikely to be prepared to pay again to watch the content online when there is the expectation this should be part of the package.

However, ITV is determined at least to test the waters for online pay TV, hoping that its premium shows such as "X Factor" and "Downton Abbey" will persauade people to pay. Making ITV Player more widely available on the Android and Apple platforms is also part of the strategy to woo viewers.

Meanwhile, ITV has bounced back to healthy profitability and paid its first dividend in three years. Group revenues rose 4 percent to £1.03 billion ($1.65 billion) for the six months ending June 30, 2011, compared with the same period of 2010, while profits doubled to £181 million on the back of an advertising resurgence. Yet this highlighted ITV's continuing dependence on traditional spot linear advertising, which its online pay plans are designed to get away from. ITV may find though that its scope for online charging will be restricted to major one-off events, and in the UK rights to most of those in the sporting arena at least are owned by BSkyB.

However, it is possible that BSkyB may be compelled by regulators to relinquish some of its sporting rights, which could open the field more to ITV.