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Small sector takes center stage at its debut

For a sector that accounts for just 13% of all TV viewing in the U.K., Britain's multi-channel TV industry has been commanding an inordinate amount of attention.

Most of the recent fuss concerned the advent of digital, the new TV platform that almost no one is watching but everyone is talking about.

First out of the gates at the beginning of October was Sky Digital, the projected 200-channel platform from satcaster BSkyB. Sky was followed in mid-November by ONdigital, the world's first digital terrestrial platform, offering all of Britain's free-to-air channels plus some of the premium services available on Sky. And sometime next year, Britain's cablers are expected to enter the digital fray.

At the same time, new channels are sprouting to feed the digital beast -- from Channel 4's arty new Film Four movie service to BBC News 24 to MUTV, the channel specific to Manchester United soccer club.

Moreover, every major broadcaster in the U.K. is investing heavily in digital, in an effort to jockey for position when digital TV supplants analog in the future.

Mark Booth, BSkyB's chief exec, says attitudes have changed from a decade ago when the U.K. broadcasting establishment was dismissive of multichannel TV. "It's moved from something you wouldn't tell your neighbors you have, to something that is credible," Booth says.

For its part, the BBC is a particularly keen digital player. The pubcaster is allocating 10% of its budget for the next five years to digital. Next year, that share of the TV license fee-funded pie will be about $300 million.

Projections vary as to the potential market share of the individual digital platforms -- certainly Sky's current 100,000-plus customers and ONdigital's boast of having had 250,000 inquiries to date are limited indicators. Nevertheless, ONdigital hopes to celebrate its 1 million subscriber mark before the millennium. Sky is talking about 6 million in five years.

"It's going to be about quality over quantity," says Stephen Grabiner, chief exec of ONdigital, which is co-owned by Carlton Communications and Granada Group, the two biggest ITV network companies. "What people want is a few good quality channels."

"It's a healthy fight," Booth counters, "but Sky is perceived to have the best channels." Sky has one- or two-year exclusive contracts with about 20 services, including popular draws such as Nickelodeon and Discovery.

But some observers believe the three Brit cablers -- Cable & Wireless Communications, Telewest and NTL -- despite coming late to the game, could prove to have the long-term edge, in that their platforms will be the most interactive, also the reason they have been slow off the mark.

Risking the most, however, are not the digital delivery systems -- most industryites believe there will be sufficient market share for all concerned -- but the channels they carry.

There already has been attrition among analog niche channels -- Channel One, Country Music Television, TCC and others. There are many more that have been losing money for years, typically with a ratings share one or two places to the right of the decimal point.

And with a finite number of Brit TV viewers for exponentially more channels, digital will be an even tougher market. Despite the introduction of smaller, more affordable channel packages, Brits have been slow to warm to multichannel TV.

"Some channels will go in the startup period," says Grabiner, adding there may be "some surprises" as to who loses out.

Ultimately, who can afford to stay in the game is the key factor. "The most important thing you can do in media," Grabiner says, "is invest in the product."

RELATED ARTICLE: Charting players on the digital landscape


Backstory: News Corp.-controlled satcaster BSkyB's platform

Key offerings: British terrestrials BBC, Channel 4 and Channel 5, Sky One (general entertainment); three tiered movie channels (Premier, Moviemax and Cinema) and Channel 4's arthouse movie service Film Four; six sports services, including MUTV, the Manchester United soccer club channel; five music channels, including MTV and 44 audio channels; four kids channels, including Nickelodeon; three news channels

To come: Sky Box Office (PPV films and sport), British Interactive Broadcasting

Cost: Cheapest package (including five pay channels): $11.70/month; full: $50/month

Hardware required: Set-top box (retails for about $332) plus satellite dish and new remote control. Set-top box is subsidized if a subscriber agrees to hook up to Sky's interactive services for one year when they come online.

Subscribers: More than 100,000, and Sky expects to have 200,000 by Christmas


Backstory: Terrestrial platform co-owned by ITV network companies, Carlton Communications and Granada Group

Key offerings: All terrestrial channels, including ITV, the U.K.'s biggest commercial TV web; Sky One; Sky Sports 1 and 3, Eurosport; two Sky movie channels, plus Film Four and Carlton Premiere

To come: First ONdigital (January), MTV and Nickelodeon after exclusivity with Sky expires; Paramount Channel (January 2001); pay-per-view events and interactive TV

Cost: Cheapest package (including six pay channels): $13.20/month; full: $56.80/month

Hardware required: Set-top box (retails for about $332), subsidized if a subscriber signs up for at least one year of services with ONdigital.

Subscribers: ONdigital is hoping for 70,000 customers by year-end

Note: Digital cable platforms are set to launch in 1999.
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Title Annotation:Britain's multi-channel TV industry and digital TV
Article Type:Brief Article
Geographic Code:4EUUK
Date:Dec 14, 1998
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