Stakes raised in Internet TV, Sky still seen on top

By Kate Holton - Analysis

LONDON (Reuters) - An ambitious plan by Britain's three main broadcasters to launch a joint Web-based on-demand TV service will boost the country's fledgling Internet TV industry and could be a first step in a new assault on pay-TV groups.

But ultimately the largest pay-TV firm BSkyB (BSY.L: 株価, 企業情報, レポート) looks likely to see off the challenge due to its combination of premium content, customer service reputation and ability to move into the on-demand market.

Internet-based programming or IPTV is available through two methods -- via online applications such as Channel 4's popular 4OD platform and as a hybrid model, such as BT (BT.L: 株価, 企業情報, レポート) Vision which combines linear digital channels with an on-demand element.

But the multitude of prices and platforms has not helped IPTV's uptake, while over 12 million households are already signed up to either satellite firm BSkyB or the TV service from cable group Virgin Media (VMED.O: 株価, 企業情報, レポート).

With more and more viewers turning to the Internet, broadcasters need their content to be online, prompting ITV (ITV.L: 株価, 企業情報, レポート), the publicly-funded BBC BBC.UL and Channel 4 to work together to produce a joint on-demand Web-based service.

The platform could also be carried on BT Vision and the similar broadband TV offering from Tiscali (TIS.MI: 株価, 企業情報, レポート), making it easier for viewers to find their favorite programs.

"Technology currently allows for a bewildering array of choice," said media consultant Graham Lovelace. "By collaborating there is definitely a better chance that UK IPTV can take the leap into the future."