‘Don’t Believe The Hype Of Digital TV’ Says Media Consultancy

During last week’s IBC UK Digital TV conference (see Newsline), Dermot Nolan, a director from the media consultancy TBS, was determined to highlight the pitfalls of digital television (DTV), and to eliminate any industry illusions surrounding the new television medium.

According to projections produced by TBS, digital television has so far underperformed and the UK is suffering from ‘delusions of growth’. Although Sky, for example, has taken on 350,000 digital customers since the launch of its digital satellite service, the cost of subsidising these new customers has cost Sky a cool £70 million. As well as this, two thirds of Sky Digital’s customers have merely upgraded from their existing analogue satellite systems.

Nolan also believes that cable is lagging behind its digital television competitors (the industry has not launched any of its DTV services yet). He thinks that cable will suffer due to its poor image and a legacy of service problems, despite attempts in the conference’s morning session by Telewest’s Tony Illsley to convince the audience otherwise.

More to the point however, Nolan succeeded in cutting through all of the marketing hype that has bombarded the consumer. Research by TBS finds that consumer confusion in the market is rife. Despite the fact that both current DTV operators (ONdigital and Sky Digital) have embarked on substantial branding promotions and that by July TBS expects total awareness of digital TV to have reached nearly 70%, the majority of consumers are still unsure about the advantages of the new television system, and do not understand its true benefits.

TBS found that better picture quality was the most important factor to 61% of people interested in buying DTV, and 54% of people cited better sound quality as the strongest determinant. Nolan stated however: “It’s official. According to Which?, April 1999, picture and sound is as good as the best analogue system.” He described some pictures as ‘soft’, and said that DTV sound is no better than the current NICAM sound technology.

Of potential DTV customers, 41% are interested in digital TV primarily to receive more channels, and 33% said that free channels were the major incentive to buy into DTV. The consumer proposition identified by Nolan of ‘more channels, more convenience’ does seem to be encouraging customers.

NOP estimates point to 1.5 million DTV homes by 2000, 1 million of which will be Sky Digital, and 500,000 ONdigital (there are no TBS predictions for cable as yet). Despite this, Nolan believes that the UK is at the foot of the digital Everest. There are currently 80 million analogue devices in the UK, and analogue transmission contracts have been renewed until 2012. TBS estimated that the cost of converting unconvinced/disenfranchised device owners will be around £3 billion. The possibility of the introduction of an additional digital licence fee by the Government is also another strong disincentive for those considering switching to the new digital technology (see Newsline).

Rounding off a very negative appraisal of what has been hailed as the television revolution, Nolan stated simply: “Don’t do it.”