Two bits of news caught my eye this week. One was the depth of Martin Sorrell’s bath and the other was the forward order book for Pace Microelectronics. You might think these have nothing much in common, but bear with me.

Lets start with Mr. Sorrell’s bath. He’s well known for his ability to judge the market and has just revised his forecast for 2009. Rather than predicting a flat year Mr. Sorrell thinks his revenues will actually fall before they pick up in 2010.

And what about Pace Microelectronics. Well apparently they are seeing quite a demand for the new breed of broadband set top boxes. It would seem convergence is finally with us but perhaps not in the way that many predicted.

Both of these events are significant. But taken together I think they tell us a lot about the future for broadcasting in this country. To start with the loss of advertising puts a big hole in the business plan of most television channels – be they on-line or not. There simply isn’t enough advertising to go round and the idea that literally thousands of channels will be funded in this way is absurd.

And what about Pace? Well that’s interesting too. Because in my mind it finally signifies true convergence. As speeds increase more and more television will be delivered via broadband. That much we knew. But I don’t think the final destination will be a computer screen. It’s ironic really because the main beneficiary of the new technology will be the humble television set.

Which makes it all the more fascinating for folks like us. We have unlimited opportunities and can now bring a tremendous array of great content right to the viewers living room. But apart from the good old license fee the truth of the matter is we have no real idea of how to pay for it!

You’ll be pleased to know that family meltdown was narrowly avoided in our house this weekend. It was the much-awaited launch of the new Doctor Who series. And despite the best of plans we managed to miss the start of the programme. But thanks to the BBC’s iplayer all was not lost and our children won’t have missed any of the gory details.

And they’re not alone. According to the statistics around 500, 000 people are accessing content in this way. There’s other research too. A recent report from the Convergence Consulting Group states that one in ten traditional TV viewers look to the web for video content - and that in a few years one in four will be watching programmes on the web.

But it isn’t all plain sailing is it? At the same time some of the sparkle seems to have gone out of the on-line video business model. Millions of venture capital dollars have gone in but profits are thin on the ground. Recent rumours have it that even market leader Joost is starting to struggle.

So what’s going on? It’s clear that there is a very strong consumer driven demand for on-line video. And people want to watch high quality programming too. But the catch is that they might not be willing to pay for it. So where’s the business model to support on-line video?

Most pundits say it will come through advertising and we just need to wait while this catches up. But I don’t think so. We’re seeing a totally new medium here and it won’t be supported in this way. So we need a new plan.

And I think we’re starting to see it. People will pay for content that actually adds value – take for example the success of programming on the new iphone. And organisations will pay to do the same.

Look at our work with the AAC&U (the Association of American Colleges and Universities), which provides a variety of videos on US higher education.  This type of content would, once upon a time, be reserved for news programmes, or to be shown during conventions and meetings.  But the professionally produced content as online video allows it to be watched by anyone at anytime.  I’m proud to say that the production quality is good enough to be on traditional television, or hosted on a website.  Check it out for yourself here.