The increasing popularity of multichannel television gave rise to one of the most interesting and informative debates at this year’s Edinburgh TV Festival, with leading figures from Sky, Freeview and Video Networks discussing the possible outcomes of this competitive market.
The panel debated three different scenarios for the future of multichannel television. A market which sees Sky dominant, one in which Freeview leads, or one seeing internet protocol TV (IPTV) and video on demand (VOD) take off due to high speed broadband.
The first scenario, in which Sky is the market leader, would result in cable being put under increasing pressure and Freeview being left with “old” and “refusenik” programming. The picture for ITV, Channel 4 and Five is equally dim, with the broadcasters all losing revenues, according to the panel.
Commenting on the first scenario, Dawn Airey, managing director for Sky, asserted the broadcaster’s aim to get 10 million subscribers by 2010 and pointed out that one reason for Sky’s strength is that it represents a multiplicity of companies, saying “we’re in a position of strength.”
Andy Duncan, chief executive of channel four claimed that if Sky become the market leaders, then this would have big implications for the both the BBC and Channel 4, putting pressure on the broadcasters and resulting in a significant weakening of public service broadcasting (PSB).
Attacking Sky he said: “In reality, people in the UK are used to incredibly high quality TV for free. You’ve got to offer them something good for them to pay, the real difference with Sky and pay TV is just sport and film.”
The second scenario saw Freeview dominate the market, eroding the pay TV arena and resulting in Sky being used solely for sports and movies. Under this scenario, the BBC would become the main player in PSB, with ITV, Channel 4 and Five all maintaining budgets, while multi channel investment stagnates.
Airey attacked the hypothesis, saying: “From research that Sky has done, and hard evidence, people are using Freeview as a stepping stone to get pay TV.”
The Freeview scenario supports a strong advertising and Channel 4. Peter Bazalgette, global head of creative operations at Endemol, pointed out that “channels and advertisers want the TV spots to continue” but argued that television needs a “new principal for advertising, allowing advertisers to get closer to programmes, via sponsorship and product placement.”
Duncan warned against growth of product placement, saying: “Although it needs to be considered, I would be very careful. Quality TV in this country is because we don’t have much commercial impact, we don’t want product placement to change scripts or programming.”
According to US research company, PQ Media, the value of the product placement market is predicted to reach $6.94 billion by 2009, increasing at a compound annual rate of 14.9% between 2004 and 2009 (see Product Placement To Hit $7 Billion By 2009).
Television is predicted to increase its share of total product placement spending by almost 7% over the same period to 61.2%, while films are estimated to lose six percentage points between 2004-2009 with a share of 30.2% in four years time.
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