Television’s Digital Future
The much-heralded and long-awaited television revolution begins tomorrow with the launch of Sky Digital’s 80-channel satellite TV service. Following hot on the heels of Sky’s digital satellite service comes digital terrestrial TV (DTT) in the form of ONdigital – a company owned by ITV franchise holders, Carlton and Granada. Cable & Wireless Communications joins the binary bandwagon a little later, in the Spring of next year with its multi-channel, interactive, “future-proof” internet-television service.
The government, the Independent Television Commission, the IPA and numerous broadcasters are currently locked in a debate over the final switch-off date for analogue television. The greeting which digital TV (DTV) receives over the coming months will almost certainly help to decide this. Chris Ladd, media executive at Fairbrother Media commented: “I think it’s basically all a lot of hot air at the moment. People seem to be very excited about digital TV right now, but it’s not going to make any real difference for at least 2 or 3 years. I’m sure it will eventually take off when the analogue signal gets turned off – in the long-run.”
“Digital TV will initially be slow, we predict a 1% take up of all homes by early next year,” said Neil Jones, a director at Carat. Merrill Lynch has predicted that there will be 12.8 million digital subscribers by 2007. Of these Sky will have 5.0 million, ONdigital will have 2.4 million and cable digital is expected to reach 5.4 million subscribers.
Whilst, at the beginning of the year, awareness, understanding and interest in DTV were low, the promotional campaigns rolled out by the BBC, Sky and (just-launched) ONdigital have raised awareness substantially. According to new research by Pace Microtechnology, the number of people who understand what DTV is has almost doubled in the last twelve months – from 36% to 62%.
This is thanks to a promotional spend believed to be in the region of a £100 million by Sky, along with a £90 million campaign by ONdigital. Both the platforms have secured deals with Hollywood films studios to provide material for their movie channels, which will offer near-video-on-demand (NVOD – where films start every quarter of an hour or so).
Digital television has also opened up possibilities for smaller, niche channels that would have been unable to broadcast in the current analogue market. The Manchester United channel, MUTV, for example, will be initially available on Sky Digital, and then roll out across the other platforms. Channel 4 has developed an alternative/cult film channel, Film Four, which will be available on both ONdigital and Sky Digital.
UKTV, the joint venture between the BBC and Flextech, has created a new MTV-style youth channel called UK Play. This will be broadcast only on digital, firstly on Sky and then probably through ONdigital. Alongside this, MTV has developed a new alternative music digital-only channel, called M2. M2 will be available on Sky Digital from launch, tomorrow.
Despite this, some media analysts are cynical about the level of appeal which digital TV will hold. Indeed, Fairbrother Media’s Chris Ladd believes that there may even be too many channels on offer: “I think that those people who already have satellite and cable don’t really want any more channels, especially the excess of 200 channels which cable and satellite are offering; and in that respect I think ONdigital’s service might do better in the short term because it offers a reasonable amount of channels.”
Who’s Offering What?
Specialists in the field have different opinions on who will lead in the digital race. Neil Jones commented: “In my mind, the winner in the digital race is going to be BSkyB – they are forging their way ahead now, preparing for the situation next year where they will broadcast Premier League games on pay-per-view. There is no doubt that digital TV will be a success in time, and I’ve got my money on Sky’s service.”
Matthew Veitch at BMP Optimum, however, sees positive points about both BSkyB and ONdigital’s services: “ONdigital have certainly come up with an exciting offer, offering major brands at competitive prices. The key to its strategy is convincing subscribers to go up to subscribing to their premium tiers after buying their primary package; with satellite, only 60-65% of subscribing homes also buy the premium channels. Sky offers a world of choice, with movies for film fans, and of course the sports coverage is absolutely fundamental and also gives more viewing choice.”
Due to Cable & Wireless’s delayed launch of its digital service, and the fact that it is yet to announce its specific programming intentions and package offers, its reception is more difficult to anticipate. The company is presently using a press and TV ‘digital defence’ campaign which aims to make customers ignore Sky’s service and hang on for the launch of CWC’s digital cable platform.
Importantly, of course, the launch of digital television creates even more advertising platforms, and media buyers have mixed opinions of how attractive the new medium will be to advertisers. Neil Jones, director at Carat, thinks: “Initially, digital TV should attract quite a bit of ad revenue because it targets and in some senses guarantees very specialist audiences, for example Sky Sports, although this will probably decrease after viewing becomes more mainstream.”
Matthew Veitch, TV Buying Manager at BMP Optimum, on the other hand, says: “In respect to advertising and digital TV, I would say that ITV will still remain as the dominant supplier of commercial audiences, and will therefore always be the most obvious outlet for television advertisers. People will carry on watching ITV regardless of the launch of digital, so we should not underestimate the roll it plays in broadcast advertising.” Again, a media specialist at Fairbrother Media is cautious not to overestimate the importance of digital television: “I can’t see that there will be a huge demand for ad space on digital TV, as so few people will be seeing it at first.”
As well as extolling the virtues of multi-channel, multi-choice TV, digital operators are also lauding the advent of interactive services. Viewers will, in time, be able to shop from their living rooms, take part in game shows, and, presumably respond directly to advertisements through their televisions. Indeed, Granada and Littlewoods recently unveiled Shop!: a new interactive digital home shopping channel that will offer big brands’ products via TV. Shop! will broadcast across all three digital platforms (terrestrial, satellite and cable). Even Teletext is revamping its now very dated look and is set to move into the interactive, internet future of information (see opposite).
Tomorrow is the tip of the iceberg, and many of the services mentioned here will not be available for some time yet. Set-top boxes for Sky Digital will be in the shops in the morning, but integrated TV sets for the Sky service are not expected until Christmas time. Digital TVs for the other services will not be in the High Street until next year. So at present, the question is, of course, is anyone really that interested and, perhaps as significantly, are advertisers and agencies willing to shell out money for what will initially be a small audience on an emerging technology; money that will be essential if the digital TV industry is to flourish.