UK carrier BT this week began a three month trial of ad funded video services through its BT Vision Download Store.

Users of BT’s PC-based IPTV service will be able to watch three films from FremantleMedia – Mischief Night, Played and The Punk Rock Movie – free of charge in return for viewing targeted advertisements.

Once downloaded, each film will be available for one month and will include adverts provided by digital advertising agency isobar, from the AA, Norwich Union and Territorial Army, amongst others, at breaks in the film.

At the time of rental consumers will be asked to download free video software from Hiro Media and will then be asked to fill in a questionnaire providing anonymous demographic information allowing the software to select adverts most suited to the viewer.

Users can also send the films to friends to be viewed on the same terms.

Ovum analyst Annelise Berendt, said BT’s tentative step into the online advertising world is all about the longer term dream of developing a new revenue stream for BT.

“Advertising represents a new and untapped revenue stream for telcos, the chance to shift away from a reliance on end-user subscriptions, and the opportunity to capture both online and TV advertising spend,” she said.

Berendt believes that in theory advertising on the IPTV platform should be a winning approach for advertisers as it provides the facility to mix classic TV advertising with the accountability and targeting capabilities of the internet.

“And it won’t be only BT and its advertisers that look forward to these results. There will be wider industry interest in the trial, especially with regard to how tolerant consumers are of advertising inserted into their video downloads, how much advertising can be incorporated and when,” Berendt said.