Insight Analysis: Our Digital Future

Sky’s digital subscriber success owes a lot to its diligence in converting existing analogue customers to the new platform. However, by the end of March this year, over 94% had made the switch, leaving just a few hundred thousand which will make little further impact on Sky’s total. Sky must now compete on a level playing field with ITV Digital, which began from scratch.

The fact that ITV Digital’s subscriber growth has been steady contrasts with the problematic image it has presented during its lifetime. This culminated in the name change from ONdigital earlier this year, following rumours of disquiet about the continued investment in the service from shareholders. Despite this, the service announced recently that it expected to break even by 2004, while the re-launch and accompanying ad campaign appears to have done the trick, delivering an audience boost “beyond expectation” according to Granada chief executive Steve Morrison.

A problem that affects both services is churn. Sky’s 10% churn rate is not good, but pales beside ITV Digital’s 23% rate. This suggests that digital TV needs to do more to convince existing customers that their investment in services was worthwhile, as well as tempting new converts.

One source of inspiration may be the new digital channels planned by the BBC. Sky has been among those protesting against the plans to use more licence fee money to fund digital services, but if the BBC manages to create some genuinely high quality and attractive options for digital viewers, Sky could benefit, especially if social groups not currently attracted by the digital offering are brought in.

Digital broadcasters may also look to capitalising on interactive services that have found favour with users. Although the hype surrounding internet access and email via the TV has fallen flat, EPGs, video on demand and interactive sports coverage could provide a key selling point to drive future sales.