Advanced Television

YouView: ‘killing off rivals’

September 28, 2010

YouView, the VOD service born from a partnership between the BBC, ITV, Channel 4, TalkTalk, BT, Channel 5 and Arqiva, is strangling investment in rival Internet TV services, according to a report by the corporate finance firm Avista Partners. And Electra Entertainment, a company that provides online TV services to clients including Tesco, has told Ofcom that investors cited YouView (formerly Project Canvas) as the reason for turning down backing.

Avista argues that YouView, which is scheduled to launch in the first half of next year, is “putting existing and future investment in the UK IPTV industry at risk”. It said its research showed that investment in the UK online TV sector has plummeted since 2008, when Project Canvas was first announced, with the decline not accounted for solely by the general downturn in the economy.

Avista estimates that in the 12 months before plans for YouView were first unveiled, IPTV investment in the UK was about $35 million, some 15.4 per cent of global investment in the sector. However, investment has plummeted since, with just $400,000 ploughed into the UK sector, outside of the YouView partners, in the past 12 months.

“The UK has witnessed a dramatic fall in private investment for IPTV-based businesses since Project Canvas was first announced,” said the Avista Partners managing director, Paul Heydon. “It is difficult to lay the blame on the economic crisis for this, especially when comparing the extreme buoyancy of US investments in this sector for the same period. It is clear the collective power of the companies behind Project Canvas is a major cause for concern for investors looking at private IPTV businesses in the UK.”

Serial TV entrepreneur and Electra chairman Jasper Smith, said “there is no clarity around what YouView is, so it’s very difficult to be eloquent about where it sits in the value chain versus Electra. They have clouded the market as a whole because of the lack of clarity about what it is … [which] has meant the public markets feel it is a pretty difficult sector to go into.”

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