MEDIA: Digital TV may enter our lives with a whimper, not a bang

BSkyB confirmed last week that there will be a low key launch of digital TV in June, with the real push beginning in the run up to Christmas.

BSkyB confirmed last week that there will be a low key launch of

digital TV in June, with the real push beginning in the run up to

Christmas.



As proof of its intentions, the company placed a big order for

decoders.



Behind the scenes, the employees involved with this most difficult

150-plus channel project have gone into overdrive. Meanwhile, at rival

BDB, the more limited terrestrial digital operation owned by Granada and

Carlton, there are also signs of spring bustle. The company is moving to

its own headquarters to set up facilities to ’multiplex’ or package the

different channels. It is considering how to add on interactive services

and has finally attracted a credible chief executive, Stephen Grabiner,

from United News and Media.



But there is no exhilaration in the air - for good reason. First, the

Brussels competition directorate has still not cleared the related

British Interactive Broadcasting, a consortium including BSkyB and BT,

which aims to offer interactive home shopping etc, thus subsidising the

retail cost of satellite digital equipment. Second, the TV sector is

privately haunted by a fear of failure. A senior cable industry figure

recently confided to me that all the signs suggest selling digital to

the consumer is going to be tough.



The latest interim results from BSkyB contain worrying indicators. They

show that the churn rate - people dropping the direct-to-home satellite

pay service - rose dramatically to 15.4 per cent during the last six

months of 1997. Sky seems to have priced itself at the very limit of

what the market will bear, even before adding more choice, in return for

extra payments. Nor did it give information of how the experimental Sky

Box Office, a dress rehearsal for digital dial-a-movie channels was

going.



It managed to shift only a net 15,000 dishes in the last six months of

1997, suggesting its pounds 28 million Christmas marketing push was a

failure.



Sky wants us to believe that its digital service will re-ignite

interest.



You could argue the opposite - that the vast majority of people are not

particularly tempted by multi-channel television. After nine hard years

of marketing, only 27 per cent of homes (6.7 million including Ireland)

are buying more choice. In fact, cable companies, able to offer

telephony services as a bait, are the ones showing growth. They account

for the bulk of new Sky subscribers - 300,000 new homes in the same six

months.



They have shown that by offering smaller, cheaper packages of channels

at around pounds 10 or so a month they can gain unheard of (for cable)

penetration rates of 40 per cent in some places.



This suggests that BSkyB has some lessons to learn, BDB’s more modest

and cheaper service, bound to launch later than Sky’s digital package,

seems more in tune with modest British consumer tastes.



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