DIGITAL TV: DIGITAL INTELLIGENCE - Can we believe the hype about digital TV? What will it really provide for consumers, advertisers and media companies? Richard Cook reports on eight of the main players, and assesses what each of them has to offer

SKY DIGITAL

SKY DIGITAL



Ownership: BSkyB



Structure: Sky Entertainment - the distribution platform Sky Networks -

programming and joint ventures, sport



Key personnel: Mark Booth - chief executive, BSkyB Elisabeth Murdoch -

managing director, Sky Networks



Vic Wakeling - managing director, sport



Base: Isleworth



Launch date: 1/10/98



Ad agency: M&C Saatchi



Adspend: pounds 65 million



Means of delivery: Digital satellite



Consumer costs: Packages from pounds 6.99/month to pounds 30 or much

more if you use the pay-per-view, or ’ahem’ adult channels on a regular

basis



No of channels: 90 at launch, but will reach 200



Programming: Sky Sports News is the only entirely new channel available

Star names: Jimmy Hill, Barry Norman, Richard Jobson, Chris Evans (with

The Chris Evans Breakfast Show on Sky 1, below)



Projected take-up: Murdoch predicts 200,000 subscribers by 31

December



If you want satellite digital television, then basically, this is the

biggest platform around. To date, this package of 56 different channels

includes 11 movie channels, five music channels, five sports channels,

seven lifestyle channels, four news channels, three children’s channels,

ten documentary channels and 12 general entertainment channels. There

are also 44 new audio channels and, oh, there’s also BBC1 and 2, Channel

4 and Channel 5. Staggered film start times - where the same film is

broadcast at intervals on different channels - boosts the headline

number of channels up to a stratospheric 200. Not surprising, then, that

Sky is confident of its ability to attract subscribers in the UK.



’The forecast we made of an installed base of 200,000 digital

subscribers by 31 December is achievable and realistic,’ Elisabeth

Murdoch, the managing director of Sky Networks, says. ’This may well be

the hot Christmas product for the year. We’ve invested pounds 100

million in digital development. It will take time for people to take

advantage of these new freedoms and there will be cynics who will say it

won’t work, but Sky has never listened to nay-sayers.’



To begin with, though, the most dramatic change for viewers will be

within Sky’s film service. The three film channels available to digital

subscribers are Sky Premier, Sky Movie Max and Sky Cinema, the same as

are available to analogue users. On digital, however, these have been

given an extra eight screens. In total, Sky Digital will be offering 25

films every night on 11 screens as part of the subscription package,

with staggered starting times. Premieres so far signed up include LA

Confidential, Jerry Maguire and Con Air. There will also be an expanded

Sky Box Office for the pay-per-view film service. This will now offer up

to 15 films every night. Pay-per-view films will be priced - as now - to

compete with the video market.



The digital audio offering will be boosted by the 44-channel Music

Choice and Music Choice Extra propositions. These are a joint venture

between BSkyB, Sony and Warner Music. An audio-only offering will play

more than 2,000 tracks per channel per week and has access to more than

300,000 pieces of music from more than 150 record labels.



The documentary output is provided by the respected Discovery Channel,

while the History Channel, currently shown for four hours a day, will be

expanded to 12.



BBC DIGITAL



Ownership: BBC Launch date: 23/9/98



Means of delivery: Direct to home via terrestrial, satellite and

cable



Despite lobbying for and successfully winning its own multiplex, the BBC

took the decision to be ’platform neutral’ in its offering, meaning that

all of its channels will be made available on all three digital

platforms. With hindsight this has proved a prescient decision. For

example, when a viewer clicks on the Sky Digital electronic programme

guide, BBC1 and BBC2 are numbers one and two in the general

entertainment listings.



In all, the BBC has earmarked a total of pounds 1 billion to the digital

revolution and, apart from making sure that its channels are available

wherever digital viewers turn, it has also embarked on a two-pronged

channel development policy of its own - one free-to-air and the other a

subscription service. Apart from offering BBC1 and BBC2 in widescreen

format and an online information service, the corporation has also

launched BBC Choice and BBC News 24. A fifth option, the BBC Learning

Channel, will go on air in January.



The BBC’s five pay-TV channels are part of a joint venture with the

cable and satellite company, Flextech. The five include UK Play, a music

and comedy channel, as well as the already familiar UK Gold channel.



BRITISH INTERACTIVE BROADCASTING



Ownership: 32.5% BSkyB, 32.5% BT, 20% Midland Bank, 15% Matsushita



Means of delivery: Digital satellite and cable



Launch date: Initial service before Christmas, with a full launch next

year



An investigation by the European Commission’s anti-trust regulators had

slowed the launch of this interactive home shopping, banking and

internet service. However, clearance has now been given and the first,

fairly limited, service could be available by Christmas.



In the long term, thousands of businesses are likely to use this system

to make their services available to customers with an upgraded TV remote

control. The system will start with a home shopping provision but that

is by no means the end of it.



The idea is that you will be able to use your trackpad to wander up and

down the aisles of a virtual supermarket, clicking on those products you

want, before tapping in your credit card details and waiting for the

home delivery service to come calling. Within a couple of years viewers

will be able to use the service to participate in programmes by pressing

a button to vote, while the big carrot is the possibility that they

could eventually use the system to edit their own sports broadcasts by

choosing camera positions, replays and so on.



CABLE DIGITAL



Key players: Cable & Wireless, NTL, Telewest



Means of delivery: Digital cable



Although apparently ideally placed to benefit from the switch to

digital, the cable companies are in truth lagging a long way behind the

direct-to-home and satellite-based transmission systems. Whether this is

by accident, as some claim, by inefficiency, as others maintain, or

because they are waiting to see how the market develops, as the

companies themselves reckon, remains to be seen. Cable & Wireless has

said it will start offering its digital version, Cable & Wireless

Adventure, from spring 1999. NTL says it is looking at an autumn 1999

launch. Existing subscribers will be offered a digital upgrade, possibly

for as little as pounds 1 a month initially, for a package including a

high-speed internet connection.



The cable companies promise to show everything that is on BSkyB and

ONdigital plus a range of interactive services, for which the broadband

delivery mechanics of cable are ideally suited. The companies are also

undertaking to provide free upgrades of hardware and decoders to

encourage existing subscribers to move to digital.



DIGITAL TELETEXT



Ownership: Teletext Launch date: Final quarter, 1998



Means of delivery: Direct to home



Digital teletext is to the current analogue system what e-mail is to the

Pony Express. Out go the old-fashioned graphics and the annoying fact

that you have to sit patiently though all the pages until the one you

want eventually comes around. In comes the ability to scroll backwards

and forwards on demand, along with internet-quality pictures and

graphics. There will also be easier navigation around the service

through the use of up, down, left, right and select buttons which will

be available on the remote control.



The old style Teletext is responsible for selling one in every ten

holidays booked in the UK, and the added advantages of the new service

are more than likely to increase that number. ’Digital teletext could

become a cheap direct-response TV device very quickly,’ points out the

head of TV at Initiative Media, David Cuff. ’And whereas the other

digital changes are likely to take time to impact on advertising in a

real way, digital teletext could start to make an impression much more

quickly.’ Teletext itself is promising a state-of-the-art response

mechanism on the new service and points out that cross-referral from TV

ads will be quicker and easier under the new service, while each

teletext page will be able to carry much more information on it.



FILMFOUR



Ownership: Channel 4



Launch date: 1/11/98



Means of delivery: Analogue satellite, digital satellite and direct to

home with ONdigital



FilmFour is Channel 4’s first digital offering, but the station is also

making it available on old-school cable and satellite. It’s basically a

television version of repertory cinema, offering independent US and

world cinema coupled with avant-garde and experimental films.

Broadcasting between six in the evening and six in the morning, it will

transmit more than 80 feature films a month. It’s one of the few

genuinely new programmes that digital television will provide. FilmFour

will show all the films that Channel 4 has funded - such as Four

Weddings, Trainspotting, Shallow Grave - as well as US independent films

and world cinema, for pounds 5.99 a month.



’We want this channel to be available to everyone,’ David Brook,

director of strategy and development at Channel 4, says. ’It’s going to

be on cable and satellite as well as the digital channels so that

everyone can see it. We’ll have seasons of films and, especially for

people outside London, it’s going to be the main alternative to the

endless run of blockbusters that most cinemas rely on these days.’

Channel 4 is also developing other digital channels.



S4C DIGITAL NETWORKS (SDN)



Ownership: Partnership between S4C, United News & Media and NTL



Launch date: 1/11/98. The SDN multiplex will carry both S4C and Channel

5



Means of delivery: Direct to home, cable



Wales’s rugged landscape is the biggest handicap to the quick

dissemination of this service, which is based in Cardiff. More

transmitters are needed than in the rest of the UK, so the process of

adapting is likely to take years rather than months.



SDN estimates that even when it is completed, only 65 per cent of Welsh

viewers will be able to receive the new services via their existing

aerials. The service, which is a mix of public and commercial, will be

carried by all Welsh digital cable operators as well as by Sky Digital,

meaning that for the first time S4C will be available throughout the UK.

Initially it will be free-to-air.



Pay programming details are not finalised yet but they are likely to

showcase United News & Media offerings. All S4C’s digital programming

will be in Welsh, broadcast daily from midday to midnight, while the

current S4C service will continue to transmit its usual mix of Welsh and

English programming.



ONDIGITAL



Ownership: Granada/Carlton joint venture



Key personnel: Stephen Grabiner, chief executive



Base: Battersea, London



Ad agency: BMP DDB



Adspend: pounds 90 million



Launch date: 15/11/98



Means of delivery: Digital, terrestrial and cable



Consumer costs: pounds 7.99/month - for any six primary channels;



pounds 9.99/month - for all 17 primary channels pounds 11/month - for

any one Sky Premium channel



pounds 15/month - for two Sky Premium channels



pounds 18/month - for three Sky Premium channels



Manchester United TV - pounds 5/month



FilmFour - pounds 5.99/month



All subscribers receive digital versions of the existing terrestrial

services, Digital teletext, BBC Choice and BBC News 24



No of channels: 32 (34 from Jan)



Programming: Has ITV and ITV2 which Sky Digital doesn’t. Plus the

exclusive ONdigital channel, First, and Shop, a joint venture home

shopping channel operated by Littlewoods and Granada



Projected penetration: Grabiner is looking to the long term - he wants

30% of the total digital market within five years



ONdigital is certainly not attempting to compete with BSkyB or the cable

operators on the breadth of its offering. In fact its mantra is that in

the cluttered digital age, less is more. It will offer just 32 channels

compared to the 200 Sky can boast. But those 32 are comprised of the

most popular Sky



offerings, including Premiership football and movies, plus ITV2, ITV’s

separate digital channel which, like its bigger sibling, is not

available to satellite digital customers. However, ITV2 has a programme

budget of pounds 42 million, which sounds impressive until you compare

it with Channel 5’s pounds 105 million and ITV’s pounds 640 million

annual budgets.



ONdigital’s biggest single advantage is the resistance that the British

public has shown towards too much diversity and choice, and in its

reluctance to invest in cable or satellite hardware. Over the past six

months, we have seen five cable channels fold up their tents and slip

away as the attempt to recreate the US multichannel experience in the UK

has failed. Channel One, Country Music Television, the Performance

Channel and even the Weather Channel found that British viewers just

couldn’t be bothered to tune in.



And, historically, it’s the same story in terms of cable and satellite

penetration. Of all the homes that could take new cable television

stations, the percentage of those that do has stuck resolutely at 20 per

cent for the past ten years. In fact upwards of 17 million homes do not

have satellite or cable. Even BSkyB finds that it loses between 12 and

15 per cent of its subscribers every year in a process known, rather

euphemistically, as ’churn’. Since all the new channels have launched,

the total amount of viewing to all television has been steadily

declining. It seems the more we have to watch, the less often we tune

in.



At the heart of the ONdigital proposition is the ’plug and play’

concept.



Viewers will initially have to invest in a set-top box, priced to match

the subsidised pounds 200 that Sky has set for its rival,

non-compatible, box. Consumers will eventually be able to avoid a

set-top box altogether by buying an integrated digital TV. ONdigital’s

subscribers will then receive, free of charge, a small device that plugs

into the back of the set.



The City broker, Henderson Crosthwaite, is estimating that ONdigital

will attract almost three million subscribers by 2005, which would make

its shareholders - Carlton and Granada - happy and, presumably, very

rich.



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).