Will SeeSaw's business model work?

SeeSaw's launch yesterday left unanswered a range of questions, largely related to its all-important business model.

The impression I formed is that it is being rushed onto the market, to take advantage of the rapidly rising tide of interest in on-demand programming, which has been warmed up by the BBC iPlayer.

SeeSaw is attempting to get a foothold for its brand in the UK video-on-demand market, which will soon become crowded with some really big opposition, led by BSkyB.

The Arqiva-owned VoD service is simple to call up and use at the moment, and it is entirely focused on television programmes, with some 3,000 hours in its library.

SeeSaw currently is offering users within the UK only free programmes, which are streamed live over the web to their computer.

But in a few months, by June, comes the tricky bit, adding on a pay-per-programme feature, which, according to one executive, will prove much more testing: that's the bit that is not yet ready.

So far it is using the well-designed technology behind Project Kangaroo, which was to be the joint BBC, ITV and Channel 4 on-demand service until it was torpedoed last year by the Competition Commission. This was then snapped up by broadcast transmission company Arqiva, which has deep pockets.

Each show you watch on SeeSaw has just two minutes of advertising, a pre-roll and middle break. The advertising will either be sold by the sales forces of programme suppliers, such as Channel 4 and Channel Five, or a third sales house, Video Initiatives. SeeSaw also promises to target adverts and programme offers, as it acquires information about the tastes of users.

The price of such advertising, compared with broadcast television, is painfully low. So the business model's success must depend, to a large measure, on subscription, and striking keen but acceptable prices.

When the subscription option is introduced users will most likely have to supply their credit card details once, and then will be debited for small payments as they select programmes. But finding an acceptable balance and presenting free and pay together might be tricky. John Keeling, SeeSaw platform controller, said the pay area would be made clear to users.

The window to "rent" a television programme and view will be shorter than the seven-day period for free VoD catchup services such as the iPlayer, just 48 hours, with terms clearly spelt out to users.

Popular US shows will be among the programming users are asked to pay for and Pierre-Jean Sebert, the SeeSaw chief executive, said his buyers were currently talking to the Hollywood studios.

There is also one obvious gap in SeeSaw's UK programming – ITV has yet to decide whether to join. ITV had been wooed by SeeSaw's US rival Hulu, which is looking to launch in the UK and wanted exclusive rights.

The real weakness of SeeSaw and other VoD offerings is that they still remain a service primarily aimed at computers and laptops, rather than plugging directly to television screens. Nor will it deliver HD-quality pictures.

However, several people at the launch, including Keeling, told of how their children had used their PlayStation consoles to run SeeSaw-streamed programmes on a traditional TV set.

One of the biggest managerial things in SeeSaw's favour, is that the launch team is largely formed from the TV industry, rather than technology.