How ONdigital has confounded critics with a successful launch

Patrick Winterbottom and his family are ONdigital customers – not such a select group as some pessimists had predicted. The announcement that the terrestrial digital company had signed up 110,000 paying subscribers in its first four months took many industry observers by surprise.

The pessimism was based on several factors. It was not just that ONdigital’s 30-channel line-up looked skimpy compared with SkyDigital’s 100-plus, as did its Electronic Programme Guide and remote control handset. Or that it launched six weeks after Sky, suffered from a pre-Christmas shortage of receiver-boxes, and then discovered that some of the boxes sold had technical problems. Or that its sports channel line-up did not include SkySports 2, which carries England football and rugby internationals.

Compounding these difficulties was a perception that ONdigital simply hadn’t got its act together, a view surely aggravated by BSkyB’s trumpeting its better-than-expected first-quarter figures of 350,000 (and forecasting a million sales by October) while ONdigital stayed silent.

Disquiet about its performance was expressed loudly last month at the TV ’99 conference in Barcelona, from both the platform and the bar. No one from ONdigital was at Barcelona to argue its case and several ITV representatives confessed private misgivings.

Back in London, ONdigital maintained it was biding its time and would release its figures when it was good and ready. When it finally did – heralding the announcement with a highly visible advertising campaign and the message “more choice through your aerial” – the City and broadcasters were impressed.

ONdigital chief executive Stephen Grabiner did much to convince the analysts and journalists that ONdigital was on course. Not only had 110,000 households signed up already but, Grabiner argued – imaginatively if not convincingly – ONdigital had had a better start than SkyDigital. And the key to its eventual success, integrated TV sets with the digital receivers built in, would go on sale sooner and cheaper than forecast.

From this summer, he announced, it should be possible to buy an ONdigital TV set from 500 – half the current price – giving instant access to the free new digital channels, such as ITV2 and News 24, and to more than a dozen pay channels. And, according to reports this week, within five years the cost could be down to a nominal 25.

Even so, sceptics point out, that still gives far less choice than SkyDigital, which helps explain why the satellite company is outselling the terrestrial operator by about four to one.

So why have people like Patrick Winterbottom chosen ONdigital? When I visited him with a TV crew the other day, his explanation was simple. He had been missing the live sports events that are now shown on Sky and his wife did not want a satellite dish on the house. The ability to buy a 200 box and plug it into the TV aerial solved his problem.

And this explains why those who claim ONdigital’s 30-channel line-up is inferior to Sky’s are barking up the wrong tree. The real comparison for those who don’t want a dish and cannot get cable is not with Sky’s 100-channel offering but with what is for most households the status quo – four or five channels. For such viewers, ONdigital’s Premiership football and its movie, kids, news and general entertainment channels offer more than enough choice.

Patrick Winterbottom is satisfied with ONdigital so far. But if he has signed up with ONdigital, why have so many other five-channel viewers gone the whole hog and subscribed to SkyDigital?

The biggest surprise when Sky announced its own customer figures in February was that more than a 100,000 of them were new to multichannel TV. Most observers had predicted that Sky’s initial digital subscribers would be converts from its analogue service. After all, had not 70 per cent of the country resisted multichannel television, despite ten years of multimillion pound marketing campaigns, cut-price offers and exclusive Premiership football?

The answer is to be found in research by CIA Medianetwork into its Medialab panel of early digital adopters. Project manager Lucy Thompson says the huge marketing campaigns by both SkyDigital and ONdigital have acted as a catalyst, prompting those who have been tempted – but resistant – to finally succumb to multichannel television.

She identifies two types of convert. The first is the sports fan, like Patrick Winterbottom, the second are parents giving in to “pester power” from their children to let them have Nickelodeon, Cartoon Network, Fox Kids, Trouble or whichever other channels their classmates are into.

The most significant discovery after the first six months of digital television is just how many viewers – new or old – have already signed up for either the satellite or the terrestrial digital service.

When Sky announced it had attracted 350,000 subscribers by the end of January, its chief executive Mark Booth said this made it the most successful launch of any digital platform in the world. Matthew Horsman of Investec Henderson Crosthwaite estimates that by now Sky has probably signed up at least 450,000.

Add to that the 110,000 of ONdigital users and it is clear that well over 500,000 homes – with probably 2 million viewers – are already tuned into digital TV. And although Sky is likely to maintain its lead for years to come, by the time all homes have digital TV, ONdigital – and cable – may well have caught up.

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