The battle between BSkyB and ONdigital to secure digital television (DTV) customers has been taken a step further today with the announcement of set-top box subsidies from both broadcasters.
Whilst ONdigital has said that it will offer customers a ‘free’ set-top box (STB) unit when they buy a new £200 TV set, Sky has stolen the digital terrestrial broadcaster’s thunder somewhat by this morning offering completely free STBs and reduced telephone calls.
Sky Digital, which launched in October last year, has upped the ante in the DTV war by offering customers both a free dish and a free STB. There will be an installation charge of £40 for this hardware. In addition to this, a deal with BT means that all Sky Digital subscribers will get 40% off all standard telephone calls, including those to the internet. To tie in with this the company is also launching a free internet service provider (ISP), skynow, which will be available to both customer and non-customers.
These offers are being subsidised to a degree by an increase of between £1 and £2 in the cost of subscription to Sky’s channels, depending on the channel package. Sky says that it had over half a million digital satellite subscribers by the beginning of May; around 212,000 of these are brand new Sky customers. To drive the uptake of Sky Digital even further, BSkyB intends to cease its analogue broadcasts by 31 December 2002.
The cost of these aggressive digital initiatives has knocked BSkyB’s nine month profits pre-tax profits back from £203 million for 1997/8 to £69 million this time. The company is expecting to fall into the red this year as it has earmarked £315 million to be used in the digital TV push.
Mark Booth, chief executive of BSkyB, says: “Our new consumer proposition will transform the company and the entire industry. It gives customers free access to digital television, a free ISP and massively discounted telephony. It removes all the barriers to entry for customers.” Booth is leaving BSkyB in the next few weeks to start an internet and interactive venture called e-partners (see Mark Booth Leaves BSkyB For New Media Company)
ONdigital, the terrestrial broadcaster joint-owned by Carlton and Granada, is offering customers a STB if they purchase a new television set worth £200. The STB itself is also worth £200. A spokesperson for ONdigital said that if customers were to spend £200 on digital television, they may as well get a new TV set out of it.
The ONdigital deal begins this Friday, 7 May and a duration for the offer “has not been specified”. The Sky offers begin on 1 June and is to run “indefinitely”. At 11:00am today shares in BSkyB were up by 24˝p at 566p.
BSkyB: 0171 705 3000 ONdigital: 0171 819 8000
