Pay TV operators could pay price in digital switchover

12 Jan 2007

European pay TV operators are in danger of failing to capitalise on the switchover from analogue to digital television, a new report has claimed.

Digital terrestrial television (DTT) providers are expected to be the biggest winners when European governments enforce the switch-off of analogue TV over the next five year. DTT providers are predicted to add 39 million European households over this time, according to analyst firm Jupiter Research.

The new broadcasting bill in Ireland, published by the Minister for Communications Noel Dempsey TD recently, provides for DTT services, as well as broadcasting Irish content to Irish communities overseas. It also sets in motion plans to switch off Ireland’s analogue TV network after 40 years in use.

Building on the current experience with the DTT Pilot, Dempsey said Ireland will now proceed to upgrade this analogue network to a digital terrestrial network.

“The advantages of DTT are many. As DTT uses spectrum more efficiently, many more TV channels can be provided, picture quality is better and high-definition and interactive services can also be made available,” he said.

“Once DTT has been rolled out and viewers have swapped over to DTT or other digital platforms such as cable, satellite and IPTV, it will be possible to switch off the analogue transmission network.”

The switchover across Europe, Jupiter Research claimed, will give pay TV operators a once-in-a-lifetime opportunity to acquire new customers as 45 million European households upgrade from analogue to digital.

However, Jupiter forecasts that the vast majority of this opportunity will evade cable, satellite and IPTV operators as consumers flock instead to free-to-air DTT services such as Freeview in the UK and TNT in France.

Across Europe, 27 million households already use DTT services, a number that will more than double by 2011.

In 2009, DTT will overtake satellite as the largest digital TV platform in Europe.

“Even though the digital switch-over offers tremendous opportunity for TV operators, effectively introducing government-mandated subscriber churn, most operators are failing to take advantage,” said Nate Elliott, senior analyst at Jupiter Research.

“Nearly two thirds of new digital TV households in Europe last year chose DTT rather than pay digital platforms like cable, satellite or IPTV. Creative pricing and bundling strategies, especially aggressive promotion of free TV offers, can help pay TV operators get their foot in the door to sell premium channels and triple-play services to consumers,” Elliott said.

By John Kennedy