Digital set-top boxes would essentially have to remain free if the Government’s target of a 95% digital television (DTV) take-up is to be achieved, according to a new report to be released this week from Continental Research.
The July 2002 Digital TV Report argues that manufacturers should face pressure to give away their set-top box (STB) equipment if the take-up targets are to be met. A theoretical pricing curve, plotted against interest in DTV, shows that the costs of STB equipment would have to be no higher than 50p in order to achieve a 95% penetration; this was anticipated to be reached by 2010 by the Government.
“The current pricing model and existing forecasts for pay TV suggest that the free to air box will have to be virtually given away to meet the Government’s forecast of 95% penetration,” says Dave Chilvers, director at Continental Research. “Whilst familiarity with the freeview concept may well increase the forecasts for sales, the give-away idea is not that incredible – after all, that is what happened in the pay TV market with free dishes and is one key initiative credited with giving the market the push it needed.”
Currently 43% of UK homes have multi-channel television; 36% have digital TV, according to Continental, which believes that the digital market is reasonably healthy despite the demise of ITV Digital and the lack of marketing funds for cable services. However, the report claims that a new catalyst is needed if the Government’s targets are to be met.
The Continental report shows that 39% of all adults in the UK are aware that they can buy a set-top box and receive extra digital channels free of charge. However, interest in a set-top box to receive freeview services is clearly price-sensitive, with the percentage interested rising from 14% to 32% as the price drops from £99 to £25.
There are currently around 900,000 homes with free to air digital. If the price of a freeview STB was set at £49, there would be a potential market of 3.2 million for these boxes; assuming the 900,000 remain, this gives a total freeview market of 4.1 million.
“Currently pay TV represents around 90% (9.8 million) of all multichannel homes. The launch of freeview is likely to change this, as those previously unwilling to pay regularly for TV services are drawn into the market by cheap set top boxes,” says the report.
Subscribers to MediaTel Insight can access this report in full, along with more national and international media analysis, forecasts and news. For subscription details please visit the site.
