Everyone likes a bargain, particularly in a recession, so getting a raft of TV channels and programmes for free is bound to get viewers excited. But how does the rise of so-called "free" TV, including Freeview, Freesat and online catch-up TV services from the major broadcasters, affect viewing in general? Does it cannibalise or augment viewing of traditional linear channels?
Early indications are that TV viewing is not suffering as audiences fragment between the various platforms and channels on offer. According to figures released by Thinkbox in January, average weekly TV viewing rose by an hour a week during 2008 to match the previous record of 26 hours 18 minutes, reached in 2003.
Those figures, based on Barb data, do not include non-linear viewing to services such as the BBC iPlayer. "We assumed there would be some substitution between online TV and broadcast viewing," says Thinkbox chief executive Tess Alps. "I'm sure there is some, but because there is more viewing overall, TV is in a good place. TV has always been free to consumers, and they accept ads in online TV as long as they are done considerately."
Gary Knight, brand partnerships director at ITV, agrees, saying: "Catch-up viewing online is supplementary viewing on top of live viewing, so it is increasing our reach and ratings levels for shows in a way that even we have been surprised by."
Findings from MPG Fabric Research, based on a qualitative panel of 100 families around the country, back this up. Of 51 respondents to a question about how Freeview, Freesat and online catch-up services had affected their viewing, 36 people, or 70.6%, said the services had changed their viewing habits, with 37.3% watching more channels and 9.8% surfing around more frequently. Meanwhile, 29.4% said free TV hadn't changed their viewing habits, with 60% of those saying it was because they used Sky+ rather than a "free" TV service.
Channel brands
By and large, channels and programmes are still more important to viewers than the Freeview, Freesat or even Sky brands. Griffin Parry, director of on-demand at Sky, says: "Channel brands are always going to have their place. People will refer back to channels as trusted ways to gain information about programmes."
That said, so-called "free" TV, with no subscription cost, is being embraced in the downturn. Freeview general manager Ilse Howling says: "We had more than a 12% uplift in sales in December and January, so we're bucking the recession trend." Last July, Freeview launched Freeview+ and 1.2 million homes now use it in addition to the 17.6 million that use Freeview.
Freeview has done its own research on viewing habits once people have Freeview in their home.
"Three-quarters say it's changed the way they watch television and half say they can't imagine life without Freeview," says Howling. "People with DTRs watch about 20 minutes more TV a day."
Research from rival platform Freesat shows viewers watch more high-definition TV once they have Freesat, specifically the BBC HD channel and ITV's HD service available via the red button.
"There will always be a place for pay-TV, particularly for football and live sport," says Freesat's marketing director Will Abbott. "But thanks to cheap DVDs and the availability of programmes on the web, content such as premium US drama and movies is available cost-effectively by other means."
ITV's director of online, Ben McOwen Wilson, says there is a difference between programme viewing on traditional linear channels such as ITV1 and viewing online: "From our experience, it is not true to say you can use a show's on-air performance as a reliable predictor of its performance on catch-up."
For instance, McOwen Wilson says The Jeremy Kyle Show is watched by about 1.5 million people in its ITV1 daytime slot, but gets hundreds of thousands more views on the ITV Player service.
ITV is keen to exploit its archive of programming, as well as the contemporary programmes available on its catch-up service. After Project Kangaroo was blocked by the Competition Commission, the new hope for the future of television is Project Canvas, an open service that will allow partners, including the BBC, ITV and BT, to access programming from the internet on their TV sets via a broadband connection. Project Canvas is still in consultation, but Freeview believes one in five people would welcome a broadcast-meets-broadband service of this kind.
McOwen Wilson says: "There are a number of options for each of us. But it's important for consumers, advertisers and rights holders that somebody creates a proposition that works. I expect somebody will bring something to market in the second half of this year. I like to think we will be among the first wave, whether we're moving on our own or in partnership with others."
For now, revenue around catch-up TV comes from subscriptions or advertising and where non-linear TV is free to the viewer, advertising and sponsorship are paramount. ITV and Channel 4 lead the way here, with Microsoft becoming the first to sponsor ITV.com's catch-up TV area last October.
The tie-up aimed to build a link between the Microsoft Windows brand and the entertainment experiences Windows can deliver. It involved pre-roll ads and integrated sponsorship branding.
No subscription cost
Knight, who has also signed up Procter & Gamble and Unilever to advertise around ITV's catch-up TV, says: "Advertisers like the fact our shop window is now open 24 hours a day. People can watch shows at their convenience and this has extended the flexibility of TV for advertisers.
"If they want to do one-off activities such as promotions or product sampling, they can do so discreetly around online catch-up rather than running a full-blooded TV campaign. So TV advertising is no longer limited to above-the-line activity, and this is starting to have an effect on advertisers who may not traditionally have used TV."
Tim Forrest, head of communications planning at OMD, believes catch-up TV is becoming an important method of targeting upmarket demographics: "Television was the mainstay of our media plans in the past, but now there is a movement from TV to online and back again."
But the setback to advertising around catch-up TV after Kangaroo's demise should not be underestimated. Neil Walker, strategic partnerships manager at ZenithOptimedia's branded content arm, Newcast, says: "We were all waiting for Kangaroo to bring a sea-change in the market. The fact it has been shelved means there hasn't been the expected massive boost to the online video market."
In the meantime, agencies and advertisers will have to wait until a new proposition launches. The smart money will be on a service that can combine traditional TV with content delivered over the internet - which Project Canvas hopes to achieve.