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beyond £300: four more reasons youview is forever niche

Written by Chris Jackson on 4 Jul 2012

YouView aims to be mass-market. At first glance they have a good shot at goal. The average person watches four hours of live TV per day, but the most prominent of YouView’s TV over IP competitors don’t provide live TV!

This is the only glimmer of good news for YouView. In our view they will never build a mass-market position. Lots of discussion has focused on the £300 launch price. Meanwhile, there are four much bigger and much more permanent obstacles:

1. too late for early adopters

If you’re reading this post you’re probably an early adopter. That means you’ve already got plenty of ways to watch TV on-demand. Early adopters are a small segment of the market, but they’re pivotal to driving adoption. Few, if any, will go for YouView.

2. remaining users won’t connect to the internet

Now the early adopters are gone, a whole lot of seemingly trivial consumer technology issues become hard. Chief amongst them is getting YouView hooked to the Internet.

According to @alexfarber, YouView chairman Alan Sugar said this morning:

If people can’t work out how to connect YouView then they don’t deserve to be watching TV

Unlike all its major Over The Top competitors, YouView has no wifi—you have to lay an ethernet cable, or use PowerLine adaptors, which don’t work across different power circuits in a house.

Even in the US half of Connected TVs remain unconnected. That’s with early adopters, and with wifi. I predict YouView connection rates will exceed 50%—but only because lots of people won’t even consider a purchase.

For now there’s only one easy solution to this mess: build a product that works well with a bad connection. YouView haven’t tackled this crucial challenge.

3. key partners don’t want it to be mass market

Worst of all, throwing the broadcaster lot in with the telcos is simply the wrong approach in 2012. The consortium made all kinds of concessions to the telcos. In return, what did they get? "Packages"

The telco partners plan to give people a subsidised box, as part of a more expensive phone and broadband package. This is a classic model, that I’ve run the numbers for many times before. They always say the same thing: it makes no economic sense to upgrade everyone, just customers who would otherwise leave.

Anyone will be able to sign up to a YouView package from BT or TalkTalk, but they’ll only actively market it to the younger, more tech-savvy audience that tend to shop around for their services. A few years back that added up to 5% of a typical market. Now much of this segment will be early adopters with little interest in a TV package. Telcos will struggle to find a large and economically viable market for their packages.

4. it will always be a set-top box

As a global TV manufacturer, how much do I actually care about the UK market? The very short YouView manufacture roster says it all. This is no surprise. The UK probably isn’t even 10% of their sales.

UK broadcasters are big fish in a small pond. Getting the attention of global TV manufacturers was always going to require an international approach. The little Britain approach to consumer technology worked for the launch of Freeview a decade ago, but it won’t work in 2012, and it will never work again.

what next?

This is a sad picture. So many bright people have worked on YouView, and for half a decade it has been a large part of the innovation agenda for broadcasters. Hopefully the problems will now become obvious, and the industry can move on.

So, what next? In a word: fragmentation. The number of ways people watch TV will multiply. It’s exciting times for a product design and technology company like us. But it’s a worrying time for broadcasters. Agreed?

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