IBC UK Digital TV Conference – Persuading The Customer
Now the digital revolution has begun, the task facing its proponents is in persuading the consumer of the merits of multi-channel, digital television (DTV). This was the theme of the morning session on the first day of the IBC UK Digital TV Conference in London. Chaired by Mathew Horsman, the charismatic American media analyst, speakers from all three digital television platforms – satellite, terrestrial and cable – explained how they are going about the tricky business of tempting consumers into multi-channel television now that the digital strand has been launched.
The marketing strategies adopted by the main players in DTV have not simply been about the switch to multi-channel digital TV. The concerns about which platform consumers choose to access digital television have been of ostensibly equal, and arguably more importance to the competing platform operators (see Newsline).
Whilst Sky is using its wide spectrum of choice and interactive features as its main selling points, terrestrial broadcaster, ONdigital, is focusing on the quality not quantity approach and allows customers to ‘build’ their own channel packages. Telewest, one of the cable contenders which is yet to launch its digital service, is stressing its significance as ‘a beacon of clarity’ in the present climate of consumer confusion.
Ian West, managing director of Sky Entertainment, stepped in at the conference to take the place of Mark Booth who was originally slated to appear, but announced at the beginning of the week that he is leaving BSkyB shortly to set up an interactive and internet company, e-partners. West unveiled Sky’s new subscriber target as one million by the end of the year.
Wider choice and interactivity were cited by West as Sky’s two key marketing incentives for potential customers. It recently emerged that Sky plans to increase the number of screens on its pay-per-view film service from 48 to 84, including 12 new screens for a film service supplied by the Digital Broadcasting Company (DBC). The broadcaster has also undertaken some original film production projects which will be exclusive to Sky. Interactive features will include services provided by Open (which will not require a PC or modem), internet access in conjunction with AOL (which will be a separate PC feature) and interactive programming through the likes of Sky Active.
West told delegates, however, that Sky was not complacent despite the claimed success of its digital launch, which reported 350,000 digital sales by the end of January 1999. Whilst 34% of these subscribers were newcomers to Sky, the rest converted to digital from their existing analogue satellite subscriptions. “Sky represents quality, value and choice. Digital satellite television represents the future of digital television in this country. We have led the first part of the revolution, and will go on to lead the second” enthused West.
Marc Sands, ONdigital’s director of brand marketing, believes that there is enough room for three platforms in the DTV sector. Although Sky enjoys ad awareness four times greater than ONdigital, and twice as much brand awareness, ONdigital reported 110,000 subscribers to its new digital service by the end of March 1999. ONdigital is selling itself on the basis of quality rather than quantity, and Sands was keen to stress that the key to ONdigital’s success is not unlimited choice, but its quality content and integrated digital televisions which are currently in production. “Being given the key to a huge vault is not the answer,” argues Sands.
ONdigital’s 15 channel service has guaranteed subscribers exclusive Coronation Street and Emmerdale specials in the future, through is connection with the ITV Network – ONdigital is 50:50 owned by ITV heavyweights Carlton and Granada. Arguably because of this, ITV has refused to let its channels be carried by Sky Digital. Digital terrestrial television (DTT) also guarantees subscribers access to all Premier League and UEFA games this Autumn. Electronics manufacturer, Bush, is currently in the process of manufacturing integrated digital television sets for ONdigital, which will be priced at £499.
“The digital revolution is a marathon, not a sprint, and digital terrestrial television will continue to grow,” commented a confident Marc Sands, “this is really really just the beginning.”
Tony Illsley, chief executive at Telewest, was perhaps the most eagerly anticipated of the speakers yesterday morning, as none of the major cable companies – Telewest, Cable & Wireless Communications and NTL – has launched its digital television service yet. Illsley described cable’s part in the digital battle as a ‘beacon of clarity’. As far as he is concerned, the exciting thing about cable digital lies in its latent potential. Far from having missed the boat in the digital race, he was keen to point out that Telewest aims to build on consumer interest and confusion with the marketing strategy for its service. The bundling of telephone services with TV also gives cable companies an advantage in the market – something which Sky’s Ian West opposed. This bundling strategy is currently being examined by the ITC and OFTEL (see Newsline).
Interactive games and a genuine video-on-demand service will, according to Illsley, give Telewest its competitive edge and unique features. Telewest’s chief executive also explained that the group’s system would be future-proof through a guarantee to replace any out-of-date set-top box technology free of charge. He commented: “I’m a believer in unlimited choice, not manageable choice. Broadband cable is the future of communications.”
Cable as a means of digital television delivery is itself going to be split into three separate services, as Telewest, CWC and NTL each launch their own service. The three cable operators will eventually need to adopt individual marketing strategies which will pit them against each other, as they do in the analogue market.
The difference in the marketing strategies of the major players in the digital race is a matter of priorities. Whereas both cable and Sky Digital are focusing on the amount of channels and choice which their services provide, ONdigital is instead using the less-is-more approach at the heart of its efforts to turn the consumer on to its digital service. As Marc Sands puts it: “Loyalty depends on product performance and delivery. All the marketing in the world can’t change that.”
IBC Telecoms: 0171 637 4383 … http://www.ibctelecoms.com/