BBC gets green light to go with the flow. On demand internet video service

The BBC has been given the go-ahead to launch its iPlayer on-demand service in November, paving the way for a transformation of the market for internet video in the UK. Read original article

The BBC Trust, the body established in January to regulate the state-funded broadcaster, said its first "public value test" had concluded the service would "create significant public value with limited market impact."

A "remarkable" 10,500 individuals and organisations responded to the consultation, the Trust said. Concerns raised by commercial rivals prompted the Trust to insist on two modifications to the original proposals.

"Series stacking" - allowing the iPlayer software to record all episodes of a series - will be limited to 15 per cent of all on-demand content, and the Trust will conduct six-monthly audits of the BBC’s progress in making the service available on all platforms.

Similar concerns about the BBC’s impact on competitors mean book readings and most classical music will be excluded from the iPlayer.

More than 1m people have watched a total of 20m programmes over Channel 4's on-demand service since its launch six months ago, far exceeding expectations and raising hopes for the nascent market as other broadcasters prepare to follow suit.

On Tuesday, Michael Grade, executive chairman of ITV, will unveil the results of the commercial broadcaster's £20m investment in ITV.com, which are expected to include a free catch-up service and pay-per-view previews, premium US imports and archive material.

According to independent producers, Channel 4 guaranteed them a minimum of £500,000 in revenues in the first year of the service but this was achieved after just four months.

"It has definitely taken off," said Sarah Rose, head of video-on-demand at Channel 4. "We were pleasantly surprised by people's willingness to pay."

The broadcaster's 4OD service, launched in October, is available online and via Virgin Media, BT Vision and Tiscali, and Channel 4 is holding discussions with British Sky Broadcasting to be included in the Sky Anytime on-demand service. "Distribution is the key to this," Ms Rose said.

Channel 4 would not reveal the number of viewers accessing the service over their computers but Ms Rose said she hoped rival initiatives would help expand the market for watching television online. "The iPlayer is going to get people used to watching what they want, when they want."

She would not say what revenue the service had brought in but said: "The real value in this for us and independent producers is about getting access to the archive." Channel 4 has been filling gaps in its schedule available on-demand by deals with US studios.

But it had also seen strong demand for programmes that attracted lower ratings on television but received good reviews in the following day's newspapers. Some rivals have criticised 4OD's online service because it is not compatible with all computer operating systems and browsers.

ITV, which told investors in March that ITV.com's selling point would be "simplicity and ease of use", is expected to make its service more widely accessible.

The BBC estimates that the iPlayer catch-up service will account for 7.5 per cent of all BBC television consumption by 2011, with another 3.8 per cent accounted for by "simulcasts" - simultaneous online broadcasts of its schedule.

Analysts at Enders Analysis last month said they believed this was "over-optimistic", and predicted the iPlayer would generate about 8 per cent of BBC viewing by 2011.

The traditional broadcasters are facing competition from online-only video services. Joost, created by the founders of Skype, is expected to launch this week with content from broadcasters including CBS and National Geographic.