Digital, Interactive and Web TV, Players
Service (Delivery) Providers

Terrestrial

[BBC] [ITV2] [ITV Digital (ONdigital)] [Channel 4] [S4C] [LBG] [PrimeEnt]

BBC

BBC has a licence to broadcast digital terrestrial TV and in June 99 it launched its first channel. Its 2 digital channels, BBC Choice and BBC Knowledge are to be renamed to BBC3 and BBC4. It also broadcasts its original analogue stations BBC1 and BBC2 on digital channels. As a public service broadcaster all its channels are "free" to those paying the standard TV licence.

ITV2

The UK commercial TV companies ITV, Channel 5 and Teletext are broadcasting the existing analogue commercial channel (ITV) on digital as well as a new ITV2 channel aimed at young viewers. Both channels are free and funded through advertising.

ITV Digital (formally BDB and ONdigital)

ITV Digital has the licence to deliver the terrestrial digital channels. It was originally known as British Digital Broadcasting (BDB) and then ONdigital until mid 2001 when it was rebranded ITV Digital. This was in response to viewer surveys that showed they did not realise it was the commercial channels digital offering. It is owned by Carlton Communications and Granada Media who each have a 50% share and have jointly invested £375m. The company is likely to be floated in late 2001. Its chief executive is Stuart Prebble.

<note: we have used the name ONdigital until the rename>

In response to BSkyB it also announced in May 99 that it would "give away" its set-top boxes. Like BSkyB it provides numerous subscription channels and it is also funded by sponsorship and advertising.

In June 2000, ONdigital announced that France's Netgem would provide technical expertise to develop a new set-top box capable of providing internet access via the TV to be called Net Box. In September 2000 it was advertising the service under the brand name on net. Available only to ONdigital subscribers, it will provide email, full internet access, a shopping portal, and the ability to watch TV and surf the net at the same time! Also it said viewers could record and send voice or picture attachments.

In August 2000, Carlton and Granada announced that ONdigital would be floated in the autumn for an estimated £400m with an expected capitalisation of £1.5bn to £2.0bn. This would provide additional capital through to 2003 when the company was expected to move into profit. However, in September Merrill Lynch valued the company at only £1.0bn after down grading all commercial TV companies in the light of falling advertising revenues. At this time, ONdigital had 750,000 subscribers with a target of 1m by year end (which it achieved) and 2m by the end of 2005. This 2005 forecast has since been down graded to 1.7m. Churn rates at 25% are very high compared to BSkyB's of under 10%. Main reasons for this are the poor signal reception in many areas. The float did not go ahead.

ONdigital has a customer contact centre in Plymouth employing 1,400 staff. Through incentive schemes the staff can earn Ondigital Dollars that can be redeemed for the company's own merchandise, meals in the restaurant or swapped for gift vouchers from High Street shops.

ONdigital is renamed as ITV Digital

In April 2001, with the majority of ITV assets in the hands of Carlton and Granada (see Merger), it was time to shake-up and re-organise the whole of the ITV - well as far as possible within the regulatory and competition frameworks. Ondigital was renamed to ITV Digital to emphasise its ITV pedigree and availability of ITV programmes. Its chief executive, Stuart Prebble, becomes chief executive of ITV.

Emphasis will switch to customer retention to try to lower the high 25% annual churn rate. Acquisition costs of £200, mainly for the set-top boxes, should come down to £40 as integrated digital television are purchased by consumers although the big question is when will consumers start to purchase these expensive televisions in quantity? The company reduced its break-even subscriber numbers to 1.7m, down from 2m, but it retains the same target date of 2003 and increased the spend per subscriber from £225 to £300. All told, ITV Digital has so far consumed £800m and this is expected to rise to £1.2bn before breaking even.

Whilst ITV is able to cross promote the ITV2 station and ITV Sport (they are only available on digital), for regulatory and competition reasons it cannot freely promote ITV Digital. To advertise itself, ITV Digital has to pay the going rates. ITV Sport will combine the sporting rights of ONdigital and ITV. These include Uefa Champions League, Nationwide Football League, Worthington Cup games and agreements to show Sky Digital's Premier League. The itv.com internet site will become a portal for all ITV brands and will merge the existing ITV websites such as Who Wants to be a Millionaire.

As at July 2001, ITV Digital has 1.1m subscribers. See UK Customers Base. In the same month there was a rumour that NTL was seeking to take a controlling interest in ITV Digital. The parties denied this was true. How NTL would raise the money is unclear given its own debts of over £16bn.

Channel 4

Channel 4 is actually government owned by is operated commercially and is likely to be privatised. It's free to air service is broadcast as both analogue and digital channels. On digital it also has a pay-per-view film channel called Film Four, and a subscription entertainment channel E4. Both are heavily promoted on Channel 4. In December 1999, Channel 4 paid a record £125m for exclusive rights to Friends and ER and these will be shown on E4.

S4C Digital Networks

SDN is owned by S4C (the Welsh Channel 4), United News & Media, and NTL. It has the licence for multiplex A that carries Channel 5 and S4C.

Local Broadcasting Group

This is new company set-up in 2001 by VFG, the UK's biggest supplier of cameras and lighting equipment. VFG has already acquired 36 of the 63 licences for local TV stations. VGF said that with the major ITV companies reducing their local output, the company believes there is a market just as there is for free local newspapers. It was unclear whether the stations will broadcast analogue or digital signals.

PrimeEnt

PrimeEnt is a media group seeking to acquire local TV licences. In May 2001 it was expected to buy Your TV that has licences to broadcast in the Isle of Wight and South Wales. Local broadcasting became possible when the Independent Television Commission issued licences using spare parts of the analogue spectrum. It is not known what will happen to these stations when analogue broadcasting ceases and the spectrum sold. This is expected to happen between 2006 and 2010.

Back to the content page for Players, Service (Delivery) Providers

External References

Note: This sub-section was originally part of the Player section, where references up to 22 July 2000 will be found.

Baker, Lucy, 2000, VFG to create network of television channels to rival terrestrial channels, The Independent, 12 December 2000
McIntosh, Bill, 2000, ONdigital autumn listing could raise £400m, The Independent, 28 August 2000.
McIntosh, Bill, 2000, NTL denies seeking ITV Digital deal with Carlton and Granada, The Independent, 16 July 2000.
Rees, Jon, 2001, New look, old problems for ITV Digital's market, Sunday Business, 29 April 2001.
Shields, Brenda, 2001, Insiders [about the ONdigital Contact Centre], Contact Centre Recruitment and Training, April 2001.
Ward, Andrew, 2001, PrimeEnt beams into local TV, Financial Times, 29 May 2001.
See the full list of resources for this web site for other related resources.