SUPPLEMENT: TELEVISION; Is the UK ready for digital TV?

What are the commercial issues facing digital TV? And will any of it add up to profit? We asked five leading industry figures.

What are the commercial issues facing digital TV? And will any of it

add up to profit? We asked five leading industry figures.



One thing’s for sure at least: digital technology will change the face

of television in the UK. The capacity to transmit a wide range of

channels will be dramatically increased. But while the potential to

extend viewers’ choice is taken as a goal worth pursuing, what of the

commercial issues? How many new stations can the UK support, and how

desirable would a broadcasting environment with hundreds of channels be?



For media buyers, the appeal is obvious. More choice means more

fragmentation of viewing. That will dilute the power - and so the cost -

of commercial terrestrial contractors. It will also make tightly defined

audiences easier to reach. Not that conventional broadcasters are going

down without a fight. At Channel 4, at least, the future for digital is

seen as a long, hard road.



For advertisers, multi-channel TV may be a highly valued route to

market. Time Warner Enterprises has built a global business in two

years, selling music through DRTV, by exploiting the explosion of

specialised, cost-effective channels. It will certainly welcome a

broader choice of channels. But such advertising revenues will be spread

ever more thinly across each station. Given consumers’ resistance to

paying for more choice, the real problem for digital TV is, who will pay

for it?



Michael Grade, chief executive, Channel 4



‘It is unlikely to spell the end of conventional broadcasting. If new,

minority service providers are to have any realistic expectation of

profit from much smaller audiences in a fragmenting market, the public

would need to pay hugely more for that opportunity of greater choice.

Willingness to pay will have a ceiling and I don’t think it will be

remotely high enough in the foreseeable future to provide secure,

reliable income for entrepreneurs to take the risk of starting hundreds

of expensive high-quality niche services.



‘There is already evidence of price resistance in subscriptions to the

popular film, sport and entertainment channels. So what price, say, a

subscription-funded angling channel? How many hours a day would even the

most dedicated angler give to it? And would that fraction of attention

by a fraction of the public be enough to generate the programming and

support a business? With high costs and fixed viewing time, new methods

of distribution are more of a challenge than a solution.’



Clive Reed, group director, Optimedia



‘Anything can happen next year with digital. In 1985, there were three

stations, then 20 in 1990, and now 53 as of Tuesday. They will keep

multiplying.



‘Digital has to be good news, because it breaks up monopolies. But it

will be difficult to monitor and to justify where to put advertising.’



Chris Kirby, managing director, Time Warner Enterprises



‘I don’t see us having hundreds of channels like the US, because the

markets are not big enough. The UK likes to think it is the leader in

TV, but some of Germany’s major channels are already number one in

Poland because these signals don’t have national boundaries. There is a

war for language control, so it would be a huge benefit to have a

significant number of English language channels broadcasting across

Europe.’



Simon Cox, broadcast director, CIA Medianetwork



‘A lot of American companies are looking to move into the UK market via

cable and satellite and will want to extend that foothold. Like Sky,

they have the resources and backing. The companies involved are big

enough to afford the investment and the wait for a profit.



‘A lot of satellite channels have created new income streams. That

educates agencies to think outside of spot and space. A lot more clients

will be using a call to action, direct marketing, sponsorship and

promotions. There will also be more joint programme funding.



‘I’m a big supporter of consolidation of sales houses for cable and

satellite. I can’t talk to hundreds, but I can talk to five, each

selling 20 channels. The more channels there are, the more spots run,

the more administration there is for buyers. It is of paramount

importance to crack that. Only the bigger players will have the

resources to do that. At the moment, size is an advantage for volume.

But it will be more important to understand clients’ business.’



Alison Jones, director, The Network Europe



‘Digital will result in a high number of channels like the US - that is

desirable and useful. It will give the consumer more power to edit their

own consumption. The problem is finding the inventory to fill the

channels. Viewers are conservative, so there will be a lot of re-runs of

old formats and the tried and tested.



‘There is a huge problem for advertisers and for us in terms of advising

how and where to spend their money. Media is not now the business of

discussing in isolation cost, reach, number of GRPs, flight - all of the

jargon we use. It is understanding media as a vehicle for the brand,

understanding the brand’s relationship with consumers, and reflecting

that in the media selection. It pushes media way up the agenda.’



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