BBC Leads the Way onto the Web

For online video streaming, the BBC's iPlayer has been a huge success. U.S. broadcasters like ABC and NBC could take a lesson

by Mark Scott

After a tiring day at the office, most Brits like nothing better than to put their feet up with a cup of tea and watch the "telly." Yet more and more now are turning to the Internet to get their TV fix. And while video-sharing sites like YouTube (GOOG) and Daily Motion are popular, the real push into online video is being led by a surprising actor: old-media stalwart British Broadcasting Corp. (BBC).

The BBC's remarkable success in delivering its news, entertainment, and educational programming via the Internet has caught the attention of broadcasters all around the world. Traditional TV companies—both producers and distributors—are nervous the Net will undermine their business models, yet they badly want to jump on the bandwagon. The BBC has proved an unexpected trailblazer and is now a model for companies such as Italy's RAI and Germany's RTL, which are looking to replicate the BBC's popularity in their home markets.

The secret of BBC's success? In a word: iPlayer. No, it's not a new gadget from Apple (AAPL), but rather a Web site that streams full-length BBC TV shows from the last seven days on demand. Launched last December, iPlayer has combined a slick user experience with popular content to triple its unique monthly audience in Britain to 2.2 million, according to researcher Nielsen Online. That makes it one of the most successful streaming video services in the world.

An Older (and American) Audience

Unlike youth-oriented YouTube, the iPlayer has also been a hit with an older audience. The BBC says more than 60% of its viewers are 35 or older—and they stay online for almost 30 minutes per session. That's a powerful draw for advertisers, who have long sought to capitalize on the public's growing interest in online TV, especially among a well-heeled adult audience.

"The BBC iPlayer is well ahead of the game when it comes to online video," says Adam Daum, media analyst at technology consultant Gartner (IT) in Britain. "We definitely could see the model exported across Europe." It's already proving to be an inspiration for British commercial broadcasters ITV (ITV.L) and Channel 4, which are in talks about joining forces for a shared online TV portal.

Not just European broadcasters could take a page out of the BBC's playbook. U.S. content providers, such as ABC (DIS) and NBC (GE), have experimented with online TV since 2005. So far, they've been swamped by YouTube, which commands 57% of the U.S. Internet video market, according to Forrester Research (FORR). By mimicking the iPlayer's dead-simple user interface and large content library, U.S. broadcasters finally could cash in on online video, says Bobby Tulsiani, a New York-based analyst with consultancy JupiterResearch. "From day one, the BBC's iPlayer started with the right experience," he says.