The announcement that VOD service SeeSaw is set to close is something of a blow for on-demand television but one that could have been stopped if the service had been more open.

This is according to Suranga Chandratillake, CEO and founder of Blinkx, the world's largest video search engine.

Chandratillake, who has just launched a set-top box version of Blinkx in the US, believes there is definitely money in web video but you have to know exactly what users want and not treat web TV like traditional television.

"We're seeing quite a shakeup in online video with SeeSaw leaving the space today. Despite eMarketer forecasting that the online video ad market will be worth $5.7 billion by 2014, it's evident that creating a profitable video streaming platform does not fit the traditional broadcast model," said Chandratillake.

"To be a success in this market, it's not about creating walled gardens of exclusive content, it's about embracing the fragmentation that is inherent within the world wide web.

"Unlike SeeSaw, the content channels that thrive in this environment will be those that help users effortlessly navigate and locate rich video content on the Web and allow content producers to engage to whatever degree they see fit."

Following Netflix's lead

Recent news that Netflix streaming has now overtaken bit-torrent traffic in the US proves that the market for online video is there, something Chandratillake agreed with when he caught up with TechRadar recently, telling us that a similar milestone could well be hit in the UK.

"The ground for VOD is fertile in the UK – broadband penetration is better than the US," he explained.

"Lovefilm is growing at a pace Netflix was a few years ago and now that its traffic is bigger than bit-torrent, it shows that Hollywood is winning against the pirates.

"If the content companies give users what they want, they will pay for it."

Despite having thousands of hours of free and premium content, SeeSaw's lack of popularity on the web meant that it never reaped success.

A lot of Netflix's success is to do with the way its re-positioned itself in the market, taking on the traditional broadcasters and winning – you only have to see the deal it sealed with HBO to understand this.

"The deals Netflix is doing puts them in the same league as [US cable provider] Comcast. It's also putting the service into the same territory of satellite providers, which is very interesting."

While Netflix shows that the walled garden approach can work – it seems that you need a big enough garden for content providers to want to play in and furnish it with more than just a SeeSaw.