The Competition Commission's shock decision earlier this year not to approve Project Kangaroo - the advertiser-funded video-on-demand (VOD) service from ITV, Channel 4 and BBC Worldwide - has led to many companies jumping on the VOD bandwagon.
Hulu, Blinkbox, Microsoft's MSN Video and Arqiva are battling to sign deals with the broadcasters, which view this new revenue stream as lucrative. Even YouTube aims to move away from short clips in favour of deals with the big broadcasters for long-term content.
As traditional television advertising revenues come under increasing pressure, it is no surprise that hopes are high for the potential profit on offer. ITV, understood to be in final talks about a content deal with Hulu - owned by NBC, News Corp and Disney - is among those hoping VOD will boost its ad revenues.
However, UK broadcasters will have to devise a wider range of revenue streams at their digital divisions, as free-to-air VOD may not be as lucrative as they hope. The success of BBC iPlayer has proved there is a consumer market for free, long-form, online content. Nonetheless, VOD advertising revenues are unlikely to be big enough in the near future to rescue struggling broadcasters.
Gerhard Zeiler, chief executive of Five's owner, RTL, claims advertising alone will not be enough to sustain the free-to-air sector - paid-for services will be necessary. Recent statistics from Screen Digest suggest online TV revenues in the UK from free-to-view programmes will be £42m.
While this is expected to reach £180m by 2013, the shares will be small once divided between broadcasters and content aggregators. There is also a risk of broadcasters cannibalising traditional TV revenues as free-to-air VOD revenues grow.
Despite these concerns, terrestrial broadcasters know they need to be part of this potentially lucrative market.
VOD aggregators will enable consumers to visit a single website to get current and archived content from rival channels. For advertisers, it will provide a one-stop shop. The arrival of Project Canvas - the next stage of Freeview, which plans to offer free-to-air TV and the internet - is VOD's best chance of surpassing Screen Digest's predictions.
There is a chance that Canvas, which could provide Hulu and YouTube on the small screen, will attract mass audiences, including older generations, to the VOD market. If everything from episodes of Inspector Morse to the latest series of The X-Factor can be accessed via a few clicks of the remote control, all ages will use the service.
However, as was shown when Google won the search-engine war, the VOD aggregators know not all will survive.
Hulu is understood to have wisely offered ITV an equity stake in its UK business as part of the pending deal. It plans to do all it can to storm the UK, as it has the US.
Meanwhile, Arqiva, which bought the well-regarded Kangaroo technology, will also be seeking deals. Elsewhere, Microsoft's Ashley Highfield, who helped launched iPlayer and led the Kangaroo project, is pushing to make MSN Video a success.
Most of the leading players have the benefit of international media or tech giants behind them. However, it will be the most creative dealmakers that prove victorious. Hulu's performance in the US makes it the one I would probably back to succeed if the ITV deal is agreed.
Free-to-air VOD may not prove as lucrative as many once hoped, but broadcasters and aggregators will still reap rewards from the sector.
Amanda Andrews is media editor at The Daily Telegraph, Sunday Telegraph and telegraph.co.uk
30 seconds on Project Canvas
- Project Canvas is a one-stop shop for TV, recordings, digital radio, on-demand services and web applications. It is, essentially, a cross between iPlayer, Freeview, a digital recorder and a smartphone - on a TV set.
- It is a joint venture between the BBC and commercially funded stakeholders. ITV and BT have been on board since the project was launched late last year, with Five signing up at the end of July. C4 has also expressed interest in becoming involved.
- The budget for the first four years of Project Canvas is estimated to be £24m.
- The partners are working with ISPs to create a 'standard' for TVs, so that fragmentation of next-generation TV can be avoided. Consumers will still need to sign up to an ISP.
- The BBC Trust has been investigating Canvas' potential public value and market impact since February. It had planned to report back on 24 July, but in June, asked the BBC for more detailed information.
- The first Canvas set-top boxes are scheduled to go on sale before Christmas 2010.