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ITV to tinker with micropayments

Jumps onto Sky HD

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Only half of ITV's income will come from advertising within five years, the company announced today. As expected, it's also going to develop paywalls around some of its premium shows, and will "test micropayments", according to chief exec Adam Crozier.

Carolyn Fairbairn, the former BBC director of strategy and now ITV's director of strategy, said the experiments could involve something similar to an Oyster card. Which makes you wonder how often these high-powered TV strategy executives ever get on a bus or a tube train. Oyster isn't really a micro-payments system, it's a stored value card.

Micropayments have been the holy grail of online payments for 15 years, and always run into two large obstacles. One is the reluctance amongst punters to pay small amounts for content, which contrasts with the willingness of punters to pay really quite large amounts for pay TV and broadband. Sky's ARPU (Average Revenue Per User) is now over £500 per year, the company said last week. The other obstacle is the credit card cartel, which ensures that "micro" payments aren't really viable for micro quantities.

Maybe it just doesn't like the word "subscription". ITV's last pay-TV venture was ONdigital, launched in 1998, which also had a pre-pay option of sorts - you could get a box with a year's bundled content. ONdigital was a catastrophic failure - it collapsed in 2002 with 1.2 million subscribers, blowing through £800m. Its legacy was a knitted monkey, and FreeView.

Instead of trying to fight Sky, ITV is this time partnering with them as a distribution company - although it really doesn't have much of a choice. Spectrum shortage means it can't punt its HD channels through FreeView, so it's piping ITV2 HD, ITV3 HD and ITV4 HD on though Sky when the channels launch in the autumn.

The company announced unadjusted revenue of £987m for 2010, up £78m, with a profit of £97m. ITV has debts of £437m. ®

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