From a remote chance of success…

Now in over a third of homes, Freeview has crashed through expectations after taking over failed ONDigital, but times are getting tougher as the digital switchover date looms. By Caroline Parry

When Freeview launched in October 2002, many feared it had taken on a poisoned chalice. The three multiplexes it took over from the defunct ITV Digital, originally ONDigital, had failed as a service despite the fact the brand’s advertising had made a talking woolly monkey into a national star.

Six years on and Freeview’s free-to-air digital TV channels, radio station and interactive services have undoubtedly been popular. Sales in 2007 hit an all-time high with 9.7 million Freeview products sold, a 64percent increase year on year. It also had a strong Christmas period with 3.8 million purchases, the best quarter figures in its history.

According to Ofcom figures for the fourth quarter of 2007, Freeview had a 36.6percent share of the UK’s 60 million TV sets compared to BSkyB’s 16.4percent and cable’s 6.3percent. It is beaten only by the remaining analogue sets, which still account for 38.9percent.

Freeview, which was originally launched by the BBC, National Grid Wireless (then Crown Castle UK), and Sky and was later joined by ITV and Channel 4, has boosted the number of digital homes since its launch, but with digital switchover already underway and the 2012 switch-off date looming, the battle for share of homes is underway.

And with the launch of FreeSat this year, Freeview can no longer claim to be the only subscription-free digital service, while competitors such as Sky, Virgin and Top Up TV plus new entrants into the market such as BT Vision, which combines Freeview with an on-demand service, also now have “value” offers. Mobile operators Orange and O2 are also attempting to move into the TV-on-demand market, with Internet Protocol TV (IPTV) launches mooted.

While Freeview already has a significant market share, some industry experts question whether it has a strong enough brand to retain its existing audience while battling with established operators Sky and Virgin or with the newcomers, which are established brands in other markets. One source says: “Freeview doesn’t have as much of a brand as it needs to have. I would say that some people that have Freeview don’t even know it, as there is nothing to interact with.”

In fact, Freeview faces restrictions on how it can brand and market its services. A source close to Freeview adds: “The involvement of the joint venture partners does make it more complex. For example, it cannot brand its electronic programme guide to boost awareness.”

However, others believe that the brand stands for low-price but highly accessible digital TV and its penetration – 16 million homes – shows that consumers do know what it stands for. But as one insider adds: “Digital terrestrial TV will always be restricted by its lack of capacity.”

This will become more apparent because FreeSat is able to add more premium services free, according to the insider. “It will have more high-definition channels, interactive services and, eventually video-on-demand. It will be more dynamic like the paid-for services.”

Freeview has also been forced to relaunch its digital recorder service, Freeview Playback, as Freeview Plus, after it failed to make an impact on consumers. Despite strong overall Freeview sales last year, just 330,000 Playback boxes were sold between its April 2007 launch and now.

Freeview marketing communications director Rob Farmer defends the Freeview Playback launch, which he maintains as successful considering the limited marketing support it received. He claims that like-for-like it outsold Sky Plus in the latter’s first year, however he goes on to point out that “plus” – used as a generic description for hard-drive recorders – has “entered the vernacular”.

He adds: “We are gearing up for the crucial pre-Christmas peak. We want to make the recorders as clearly understood and people as aware of them as possible. For us, it makes sense to align ourselves with the vernacular.”

Virgin has already clocked this trend and launched its recordable hard-drive box as V Plus, so few are surprised that Freeview is following suit. However, as the source points out, Freeview is unable to compete directly with Sky, as it is a shareholder. This is despite Sky’s plans to replace its free-to-air TV offer with pay channels on the platform, a move that is under investigation by Ofcom.

While there are obstacles facing Freeview as more services enter the market, the source close to Freeview believes that the current economic climate is perfectly suited to its offer, as consumers may see a pay-TV service as a luxury when their finances are squeezed.

He explains: “The time is here for an extensive free digital TV service that is well-positioned and placed. It needs to realise its potential, as the trends are going its way.

“It does need to stand for more in terms of a high-quality service that you don’t have to pay for. But I think that it is a brand that’s time is about to come.”

Facts and figures: Freeview

• 86.7percent of homes have access to Digital TV, according to Ofcom figures for the fourth quarter of 2007
• Ofcom says there are 9.5 million Freeview-only homes
• Freeview has a 36.6percent share of the UK’s 60 million TV sets. BSkyB has a 16.4percent share and Virgin Media 6.3percent. Remaining analogue sets accounted for 38.9percent, according to the Ofcom data.
• Freeview has sold 330,000 Playback boxes since launching in April 2007.
• There are 3.4 million of Sky’s 8.8 million subscribers with Sky Plus, 38percent of its total subscriber base.

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