All the major broadcasters have now launched IPTV or web TV services to an over-excited media sector quick to hail Web 2.0 as something no industry player can ignore.
While it's true that users can expect a much richer, more interactive, video-based experience online than they did back in the late 1990s, there are more doubts about how these services are going to be supported than many care to admit.
Channel 4 has already ditched the paid-for model on its video-on-demand catch-up service, 4oD, after only three months, in favour of a largely free ad-supported model. ITV, meanwhile, is the first to acknowledge that the ad-funded model is problematic when online.
For Gary Knight, ITV's brand partnerships director, the main problem facing the broadcaster's new VoD service, ITV.com, is the lack of a suitable ratings measurement system.
While Barb ratings dictate the price of TV airspace, there is no online equivalent. Consequently, video ads on ITV's site, which offer unique click-throughs to the advertiser's site, are being traded on internet dynamics when, arguably, they are worth far more.
Knight says: "It's a big challenge and we're working with the IPA, Isba and other trade bodies to look at the best way of achieving an industry-wide standard in this respect."
Legitimate standard
He argues that ITV needs this data not to emulate TV's revenue model, but to keep the marketing directors happy. "Post-Enron, the marketing director's spend has to be quantified - they can't spend money at will and have to provide research based on a legitimate standard," he says, estimating this research will take about a year to assemble.
Indeed, when Bernard Balderston, Procter & Gamble's associate director for media, is asked how attractive advertising on broadband TV services is, as a purveyor of fast-moving consumer goods, his response is that it's too early to say. "The services have only just begun and there's been no research on them," he says.
Stephen van Rooyen, director of product development at Sky, says it is taking "a cautionary approach" to its online revenue models.
Sky's VoD Service, Sky Anytime, is currently being offered free to its subscribers as an "added value" service. Van Rooyen says: "We don't want to discourage the viewing experience - customers need to get comfortable with the platform first."
Gravitating slowly
While Sky Anytime advertisers are now being offered two extra platforms, there's no defined rate card that charges extra for these experiences and, for the time being, negotiations are on a case-by-case basis. "We need to establish metrics first before we can negotiate commercial terms," van Rooyen says.
The beauty of online is that it allows broadcasters to attract discrete customer groups who wouldn't normally advertise on TV - something Sky Cast hopes to achieve.
Likewise, brands that advertise online are likely to reach consumers who are slowly gravitating away from the TV set. According to Phil Wise, head of broadcast at Mediaedge:cia, broadcasters' online offerings will future proof their share of 16 to 34-year-olds - a demographic that is currently spending up to six hours a day online. He adds: "Advertisers look at online TV advertising as an add-on that they're willing to exploit at the right price."
According to Neil Walker, an online planner and buyer at Zed Media, the attractions of advertising online kick in when a brand is looking to extend its reach. He cites a financial services client that had already run a TV campaign but was looking to target a "TV-light" audience. It placed video ads on C4's web and VoD service and Sky's website. Walker says: "It suited the client, because the cost of doing this on TV would have been prohibitive and you get to a point where you're not reaching anyone new."
Against a backdrop of decline in traditional advertising revenue however, there is a fear that online TV income will come out of brands' TV advertising budgets.
Sky's van Rooyen is optimistic that while not all brands have a separate budget for online, they soon will - and points to big, fast-moving consumer goods companies such as Pepsi and Coca-Cola, which have increased their spend online in the last few years. He says: "Even if it's only by a couple of per cent per year, that per cent will tick up - that translates into millions of dollars when you consider what their marketing budgets are."
BUSINESS MODELS
ITV.com
An ad-funded, mainly free model. Ads charged for on the basis of current Internet rates. It offers a "click and watch" streaming service (no need to download); a 30-day catch-up facility and access to a "Best of ITV" archive
4oD
A free, ad-supported model since an overhaul in March. Content is either streamed or downloaded. Sponsors are able to extend their on-air association with shows with a 10-second sponsorship clip played immediately before the show starts
BSkyB
Sky Anytime is a free service to subscribers and content can be downloaded to PC, TV or mobile. The pay-per-view broadcaster also recently launched Sky Cast, an ad-supported user-generated content site that non-subscribers can access in partnership with Google
Five Download
A paid-for model launched in partnership with BT Media and Broadcast last autumn. New, previously-unseen programmes are priced at £2.49, with all other episodes at £1.49. The site is sponsored by search engine Yell.com, which also sponsors the broadcaster's US crime dramas on TV.