Managing Director at Steelside
26 November 2001 02:27am
[INTERACTIVE WHITE PAPER] Interactive TV Advertising: A Marketer’s Guide
Sky Digital continues to dominate interactive TV in the UK. What are the reasons for their strong position and potential success in the future? Here are seven of them:
- Audience size. Sky Digital currently has more than 60% of digital TV viewers in the UK.
- They have managed to control their churn rate and, at 10.4%, currently enjoy the lowest annual rate of all the platforms.
- They have already converted their analogue base and, in the face of difficult economic conditions, can scale back subsidies and focus on generating revenue from their subscribers.
- In the minds of consumers, the Sky brand is high profile and has a track record of delivering compelling content and good customer service.
- They own extensive content rights (primarily to big name live sports events and film releases) and a number of channels that are exclusive to their own platform.
- Despite current market pressures, they have significant financial backing from News Corporation. In addition, their existing subscribers and programming businesses provide steady revenue streams.
- They have been leaders in developing new interactive services and features. Apart from the lead this has given them in identifying new revenue models, it has also ensured that their subscribers become comfortable with interacting with the TV in new ways.
Concerns have been raised about the extent of Sky Digital’s dominance, yet many people tend to forget the considerable risks that were taken by BSkyB with the launch of its digital TV service. Is it therefore unfair or too early for the government to intervene or is this action important to the long-term success of UK digital TV?
CEO at Econsultancy
31 January 2002 08:25am
3 reasons in the way of Sky Digital’s continuing success
1. The government
2. The BBC
It seems that Sky Digital may become somewhat a victim of its own success as the three interested parties above gang up to intervene and ensure that digital terrestrial does not completely lose out to digital satellite.
If one is to believe recent newspaper articles we’ll soon be able to buy a £99 set top box bringing us free-to-air digital channels. This box is being subsidised and promoted by the digital trinity above.
Obviously each of the three has vested interests:
- If the government is to stick to its plan to switch off analogue sometime in the next 5 years or so (and sell off the spectrum for a tidy sum no doubt) then it has got a long way to go: digital TV take up has slowed now that the ‘low-hanging fruit’ have been converted and there are still over 15m homes who do not have digital TV.
- The BBC meanwhile is launching all sorts of new digital-only channels. It will become increasingly hard to justify their licence fee, which helps finance these channels, unless people can actually receive them.
- ITV Digital is in dire financial trouble and, despite its cute monkey, needs a large injection of subscribers. A big upswing in the number of digital TV enabled viewers would certainly help.
So it seems, Murray, that your last paragraph was spot on – did you know something about the anit-Murdoch conspiracy?
But what does this all mean for *interactive* digital TV? I guess it can only help but neither satellite not terrestrial have the return path capabilities of cable. The cable guys have been noticeably left out of the above digital alliance – understandably if it is a government-led initiative as cable will never reach the whole of the UK. At the moment cable feels a little sidelined anyway with all their share prices taking a hit and NTL fighting for its survival.
Clearly interactivity in terms of added value content or functionality to support broadcast content (camera angles, on screen stats, voting, quizzes, games etc.) will continue to gain ground as championed by the BBC and Sky in particular. But what about T-commerce?
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