ITV “well positioned” to launch pay VOD in Q2

British commercial broadcaster ITV is expected to launch its own pay video-on-demand service in the second half of 2012.

The broadcaster is set to launch transactional and subscription style services to its ITV Player later this year and will develop services based around micropayments.

This comes after ITV recently inked deals with Netflix, Lovefilm and Sky for catch up access to a number of its series.

Investment bank Morgan Stanley notes that ITV’s arrangements with these digital services are favourable and could become even more so depending on viewership. “We believe there is an annual fee arrangement between the two parties and that terms could expand depending on the level of viewership of ITV content. We believe ITV is peculiarly well positioned amongst free to air broadcasters to catch this market shift,” it noted.

The bank also says that ITV’s existing video-on-demand deals with Virgin Media and BT Vision are set to expire later this year and are likely to be renewed on more favourable terms. “Our understanding is that these are currently flat fee deals and that these are likely to be shifted onto a basis with a greater variable reward element and for which ITV clearly expects to be paid more,” Morgan Stanley noted.