Digital Television: the lesson from Watership Down
London,
28 November 2001
Printable version
Speech given at
the Voice of the Listener and Viewer Conference
My job with the 大象传媒 is
to help develop the market for consumers who want digital television
but do not want to subscribe to pay TV. In the discussion I will answer
questions about the digital broadcasting as a whole but, for my talk,
I'm going to tell you a little fable about digital television.
I don't know how
many of you are old enough or young enough to be familiar with the classic
children's storybook Watership Down? If you recall, a band of rabbits
are on a journey in search of a new home. They come to a large warren
where a suspiciously small group of large and well-fed rabbits offer
them hospitality. The place seems secure. Cabbages and other vegetables
are left out for them, so they can eat as much as they want without
having to work for it. It's just slightly too good to be true -
and a rabbit called Fiver has an uneasy feeling about it.
At first the others
don't believe him and they want to stay. Then they learn the hard
way that the whole place is snared. Not many of the well-fed long-term
residents survive. Although life is easy and comfortable there, Fiver
and his band know that this is not a stable environment in which they
can settle.
What does this have to
do with the launch of digital television in the UK? In the short space
of three years we have achieved digital TV take-up by eight million
households, about a third of the UK total, and the Government has been
looking forward to seeing the whole nation switch to digital.
And for many of those
involved it's been rather comfortable. If you're a consumer,
a pay TV company will give you a receiver free (you just need to agree
to their terms). If you're a TV set manufacturer, a pay TV company
will place an order for your receivers and put its own branded electronic
programme guide inside them, so you don't have to do that work
for yourself. If you're a retailer, a pay TV company will give
you an extra payment every time you sell a receiver to a pay TV customer.
Not surprisingly, virtually all the UK's digital TV households
have turned out to be pay TV customers. Digital television became synonymous
with pay TV.
At first sight, everything
looked alright. The pay TV companies were growing rapidly. The Government
counted every new subscriber as progress towards digital switch-over.
The free-to-view broadcasters were getting their services into homes
on the back of the pay TV companies' marketing investment. The
receiver manufacturers and the retailers with the pay TV company contracts
had plenty of business. But, like Fiver, I and some of my colleagues
sensed that this was not a stable environment in which we could all
settle.
From the 大象传媒's point
of view, we could not allow digital television to remain synonymous
with pay TV. All licence fee payers are paying for the 大象传媒's digital
services and we can't possibly say to the public that you can only
get our services by subscribing to a pay TV company first - or be happy
with a situation in which licence fee payers lose our digital public
services if they cease to subscribe (as is the case for both cable and
digital terrestrial).
Nor could the Government's
plan for digital switch-over work if digital television remained synonymous
with pay TV. Governments can't compel people to subscribe. Many
households patently do not wish to subscribe and households who are
happy with subscribing for their main TV set are unlikely to want to
subscribe for all the other sets around the house. There are various
possible route-maps to digital switch-over but they all go through a
town marked 聭free-to-view'.
And, finally, as became
apparent last summer with the leak of Granada's confidential letter
to the Prime Minister, the pay TV companies themselves cannot continue
in perpetuity to subsidise consumers, subsidise manufacturers and subsidise
retailers. In particular, this is not a stable environment for ITV.
So, like the band of
rabbits, we need to think again. Pay TV is fine, and some of it is very
impressive, but it's part of the digital TV picture, not the whole
picture. And the rather obscure-sounding Free-to-View Digital Television
project which I launched last spring is beginning to make sense across
the industry. Indeed there is no awkwardness about collaborating with
the pay TV companies over it.
What we're working
on - and the job is not yet complete - is a pattern of digital television
(which in one respect is the opposite of the pay TV model): the digital
TV services are free-to-view but, unless they wish to be subscribers,
consumers have to pay for their own receivers (just as in the analogue
world).
Today, alongside the
eight million pay TV digital households, there are probably only about
300,000 free-to-view households. If we're to develop this to the
point where free-to-view becomes much more normal, five ducks need to
be lined up in a row - if we switch metaphors and leave the rabbits
behind at this stage.
1. The first duck is
attractive free-to-view services, appealing enough to motivate consumers
to invest in the necessary receivers. And, if we're candid, 大象传媒
Choice and 大象传媒 Knowledge haven't proved compelling enough. As you
know, the 大象传媒 has therefore proposed, after consultation, a new set
of digital services to be launched in the course of next year. There
is still an unresolved question mark over our plans for a 大象传媒 Three,
which the Government did not approve on the basis of our original submission,
but the rest of our digital television proposition is as follows:
路 大象传媒 One & 大象传媒 Two, with the 16:9 widescreen picture (only
available on digital transmissions) increasingly the norm and with a
growing number of interactive features
路 大象传媒 News 24, well respected and valued, particularly in these
troubled times, again with a growing number of interactive features
路 a pre-school children's channel, high on original production,
and no ads
路 an older children's channel, high on original production,
and no ads
路 大象传媒 Four, which aims to be culturally enriching and television's
closest equivalent of the high quality radio services we offer on Radios
3 & 4
路 大象传媒 Text, information and the foundation for interactive features.
The free-to-view service
proposition is not purely a 大象传媒 one. ITV-2 and ITN are important ingredients
and our research suggests there is a definite market for a modest number
of quality services from quality broadcasters which is quite distinct
from the multi-channel pay TV market.
2. The second duck is
free-to-view receivers which consumers can buy or rent with no subscription
strings attached. Here we have to encompass both digital terrestrial
and digital satellite, since the digital terrestrial television coverage
is about 80% of the population and we wish to deliver our services universally.
There are free-to-view
digital terrestrial TV sets in the market, at sizes of 28" and
above and at prices normally upwards of 拢600. We hope the demand
for free-to-view services will expand this range to encompass both DTT
set top boxes and a broader choice of TV sizes and prices.
For satellite there is
currently a set top box and dish offer from BSkyB, for a one off cost
of 拢100, which requires consumers to connect their box to their
telephone line but carries no obligation to subscribe. The free-to-view
broadcasters supply the satellite viewing card.
3. The third duck is
retailers interested in serving free-to-view customers. This means they
need to stock the free-to-view receivers and understand the coverage
areas for terrestrial and satellite signals. They also need to handle
installation and aerial advice. For digital satellite, installation
and the dish aerial are integral to the purchase. While digital terrestrial
receivers will usually work with an existing aerial, this is not always
so and some provision is needed for a suitably qualified aerial installer
where this is appropriate. This is a current issue. Some retailers can
handle this but others, accustomed to relying on the pay TV subsidised
arrangements, find it more difficult to support free-to-view customers
in this respect. The cross-industry Digital TV Group has just issued
a free-to-view training pack to retailers.
4. The fourth duck is
free-to-view consumer information and marketing. This will inevitably
be a mix of broadcasters marketing their services and manufacturers
and retailers marketing their receivers, and rightly so. But we do now
talk to each other. Both the 大象传媒 and ITV are committed not only to promoting
their digital services but also to explaining how to receive them, through
leaflets, website information and on air publicity. You'll see
more of this from both broadcasters in the run-up to Christmas. In the
latter part of December, as agreed with the Government, the 大象传媒 will
be publishing its plans to promote digital services and equipment, both
for television and for radio, during 2002. Also the Digital TV Group
is developing a website called freetoview.co.uk designed to give supporting
information to consumers.
5. The fifth duck is
customer service. With pay TV, it's easy to know who to contact.
For free-to-view, if you want to know about the services or the transmissions
and coverage areas, the broadcasters will help you - but, if you have
a problem with your receiver or your aerial, clearly that's a retail
matter. Again, that's right and proper. But, across the industry,
we need to make sure that there are no gaps in the provision of support
and no confusion in the consumer's mind about whom to contact.
As new services and new interactive features come on stream, this will
be particularly important.
So you can see how the
free-to-view digital television proposition is taking shape. While it's
not fully mature yet, it is now a real consumer option and, for a price
somewhere in the range 拢100-拢200, either for a set top box
or for the differential price of a digital TV set, you can now become
a free-to-view digital TV customer. And I have colleagues who are working
towards the same goal for digital radio.
