High definition is broadcast television's cherry on the icing on the digital cake. Conventional mainstream broadcasters believe (or hope) it makes the medium future-proof, keeping it one step ahead of the anarchic world of YouTube and its web-TV brethren.
It's a big deal for consumer electronics manufacturers - a huge number of Sony Bravias and other widescreen LCD sets, for instance, will continue to be purchased on the basis that they are "HD ready". And for the major broadcast platform owners - principally BSkyB and Virgin Media - HDTV represents an important component in the next stage of revenue growth.
Sky and Virgin offer HDTV on a premium subscription basis - so imagine just how amused they were when they read that Freesat, a joint venture between the BBC and ITV, which launched last week, is offering HDTV for next-to-nothing.
Potentially, Freesat has always seemed a threat to Sky. The two are, after all, both satellite services. So if you want to save money and don't mind missing out on some sport and films exclusive to Sky, you're perhaps going to opt for the cheap option. A standard Freesat box costs less than £50 and there's an installation fee of under £100. Then you get 80 channels or more free for as long as the kit lasts.
And we've already witnessed the meteoric growth of Freeview, the free digital terrestrial service. Freesat can reach areas of the country that can't receive digital terrestrial signals, making it a naturally complementary service to Freeview - and potentially as successful.
It can also target current Sky subscribers and attempt to persuade them to trade down, and some might not take much persuading. To Sky's dismay, the BBC and ITV have been looking to withdraw their HDTV services from the Sky Digital platform, thus making HDTV content such as the Olympics, Wimbledon, Uefa Champions League and the FA Cup exclusive to Freesat. Should Sky be worried?
Not really, Matt Platts, a managing partner at Vizeum, says. He doesn't, for instance, think that Freesat's exclusive HDTV sport is much of a trump card: "I don't see Freesat as direct competition to Sky - I think it will primarily be of interest to the 25 per cent of the population who can't receive Freeview for whatever reason and who have not signed up for Sky. I see one of its most important areas of opportunity will be people who are already Sky subscribers buying this as their second box and plugging it into their existing dish."
And Paul Richards, a media analyst at Numis, agrees. Since its 2004 strategy review, Sky has successfully reinvented itself - and price is now a far less important factor. He states: "Sky has broadened its appeal, softened its brand, developed its product proposition to embrace things like HD and broadband, and improved its range of prog-ramming. It's not just about movies and sport these days. There are 26 million homes in the UK and Sky is in more than nine million with a target of being in ten million by the end of 2010. I expect it to meet that target."
Howard Nead, a managing partner at PHD, believes Freesat is too late into the market to make a major impact. "It will take its place as just another part of the broadcast ecology - and in the run-up to analogue switch-off, consumers need as many options as possible. It should be seen in that context," he says.
Meanwhile, Tony Regan, Initiative's planning director, argues that consumers have become far too sophisticated to find Freesat's freeness a compelling proposition. He concludes: "It used to be about making a decision about whether you wanted multichannel and then whether you were going cable or satellite. Now it's complicated by things like double and triple plays - and many people have had experience of more than one platform.
"Freesat will undoubtedly mop up some of that part of the market that hasn't yet gone digital and it may well appeal to a few HD nuts. But we're not yet at the stage where HD is seen as a big thing."
NO - Matt Platts, managing partner, Vizeum
"I'm not sure HDTV content will be decisive. Sky subscribers may be irritated to lose HDTV Champions League, but if you're in the market for HD sport, your first port of call is still likely to be Sky."
NO - Paul Richards, media analyst, Numis
"Sky's proposition isn't as price-driven as it was, but it's still true that if you're on a bundled (television, broadband, telephony) package, you're getting value. I don't think there will be significant churn."
NO - Howard Nead, managing partner, PHD
"The HDTV element is interesting, but the picture you get through a conventional Sky box is already great. I'm not sure ITV is in any position to put much marketing money behind it at this stage."
NO - Tony Regan, planning director, Initiative
"Freesat will mop up some of that part of the market that hasn't yet gone digital, but I'd think Sky's subscriber base has become more loyal, thanks to things such as Sky+. Are the savings big enough for people to go through the rigmarole in switching to Freesat?"
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