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The next 12 months will see the start of the next great revolution in broadcast media - the shift from viewers watching scheduled TV to a world dominated by video-on-demand.

In March, ITV, Channel 4 and the BBC go head to head in this new battle for viewers, with the arrival of the much-anticipated BBC iPlayer alone promising to make 30 million hours of free VOD content available.

In the same month, ITV launches its video-on-demand over broadband offer, while Channel 4 will unveil the advertising strategy for its 4oD service, which launched ahead of the pack last November.

Platform owners Sky and ntl:Telewest also have big plans for VOD, so rivalry will be intense and the strategies of the different media owners will come under intense scrutiny as each works out how best to attract viewers and make money.

Gary Knight, brand partnerships director at ITV, says the broadcaster will be in a position to make money once there is an appetite from advertisers. "First we have to prove there is a market for this content," he says. "But I'm absolutely convinced people will be prepared to accept advertising if the content is free."

While Knight believes the potential for the new medium is "fantastic", he accepts "there isn't an expert in the whole world who knows the answers". "Anybody who claims they do, is lying through their teeth," he adds.

Huge challenges

Nigel Walley, managing director of Decipher, the consultancy helping ITV draw up its new ad formats, says the services will open a direct route to the consumer for ITV's sales operation for the first time. But he warns that this brings huge challenges, not least the need for a massively revamped customer relationship management capability.

He is also concerned that rivalry between the broadcasters could cripple the new sector at birth, with competition coming at the expense of the evolution of a new market.

"We'd like broadcasters to go to the platforms with a very clearly defined list of what they want, rather than reacting to events," he explains. "They should be saying, 'this is what we want you to build and then we will come'."

Steven Hess, managing partner of Omnicom's Weapon7, warns broadcasters that the launch of several new set-top boxes is quickly turning the long-awaited convergence of TV and IPTV into a reality, with the likes of Apple TV, which uses iTunes to download video content, and Microsoft TV, which uses Xbox 360 and the Microsoft Windows Home Server, not waiting for broadcasters to develop revenue streams.

"As soon as people start to use these new interfaces, ITV, the BBC, Channel 4 and the rest will be relegated to being providers of content," he says. "The people with most control over advertising revenues will be those who control these interfaces."

Hess believes ITV is wrong to launch its broadband strategy by forcing viewers to sit through commercials in initially primitive "pre-roll" ads that run while content is downloading. "That's the worst-case scenario," he says. "There is nothing more irritating for viewers and it's not the way to get them to engage with brands."

Knight says more advanced video-on-demand advertising will only come further down the line, but he warns: "People talk about all sorts of ad formats on VOD in the US, but the reality is that nobody is watching many of them."

Audiences will only come if they get good content, but Knight says ITV and the rest will struggle to persuade brands to spend big when there is still no recognised way to measure the success of campaigns.

New currency

Broadcasters are in talks about creating a new currency for video content, but neither TV measurement body Barb nor the Internet Advertising Bureau have come up with anything credible.

As Walley says: "What's being created is a new media. It is neither TV nor the web and it has shown up the limitations, not just of Barb but also of internet measurement systems.

"We've got two to three years to get this right before it becomes a big issue. I would like to see lots of innovation and lots of trials. There are bound to be mistakes."

He believes the big danger is that services will be developed without advertising. "Some senior executives in media companies rely too much on young, techie teams who have this utopian view that these formats should be ad free," says Walley.

"Then a couple of years down the line, reality will come crashing in and the ad teams will be called in to try to sort out the mess."

ITV'S ON-DEMAND STRATEGY

- ITV is expected to launch its broadband strategy on 31 March, by unveiling its own version of the BBC's iPlayer or C4's 4oD device

- It is promising hundreds of thousands of hours of archive material and says that it will develop exclusive content over broadband, such as spin-offs from soaps and user-generated material

- ITV is coy about its VOD strategy, but it is going down a different road to Channel 4 in that the vast majority of its content is being given away and will be supported by advertising. Channel 4 has so far relied on a pay-per-view model, charging viewers 99p per download

- ITV has signed a deal with marketing services network Omnicom's pooled buying giant, OPera, whose clients include Vodafone and Sony, to help fund research into new ad formats and provide the initial advertising for ITV's video-on-demand content

- Various OPera brands are believed to be in line to show "pre-roll" ads, which will trail downloaded content from the various genre sections of the ITV video-on-demand archive.