It's sad to hear of the demise of ITV Local, the innovative local internet TV service launched by the UK's main commercial broadcaster some three years ago.

However, it does point to the difficulty in making money from online TV services. The main issue is that the costs of production and marketing/promotion outstrips the revenues that can be generated.

So, is this an indicator that narrowcasting is not commercially viable ? I think not.

ITV Local was, partially, launched as a way of enabling ITV to move away from its public service commitments and signalled a final end to the regional structure that commercial television in the UK had adhered to since the original commercial broadcast licences had been awarded (the infamous 'licences to print money'). In this much, it has served its role as OFCOM has allowed the wholesale dismantling of regional broadcasting in the UK.

There were failures within the service - it suffered from the lack of intelligent cross-media promotion that so blights ITV; also, the more recent lack of regional programming meant that the service was in danger of being starved of future content and the the advertising downturn must also have played a part. More than anything, I would argue that it was not local enough, keeping to the somewhat false borders of the old ITV franchise areas rather than concentrating on 'real' communities.

But the reality is that there is less and less interest in local news. Communities are now virtual and local engagement is a severe problem - and is especially a challenge for local authorities and local service providers.

ITV Local, perhaps, failed to engage with enough local stakeholders and failed to capture the imagination. The original model of locally generated video advertising never took off and more engagement with local newspapers to cross sell advertising might have been a solution to this issue. There should have also been more non-video content.

However, I believe that it was a service ahead of its time and its demise, along with the recent BBC Trust ruling on the BBC's local service, now leaves the field open to the local newspaper, or even to new entrants to the market. But they will start without the benefit of the extensive back library that ITV had, so it's difficult to see any kind of improved provision in the medium term unless it is supported by public service funding.

Personally, I'd like to congratulate all the people who tried to make this service work. Its demise is yet another indicator that ITV just doesn't have a clue on where its future lies.