ITV announces integrated media plan

At the end of April, the UK's Granada and Carlton Communications announced a plan to align their analogue broadcast netawork, ITV, with the companies' digital terrestrial platform, ONdigital, to create an integrated free-to-air, pay television and online media business. But is it enough to raise subscriber levels at ONdigital?

The most significant aspect of the announcement - which comes amid a downturn in the UK television advertising market and lower than expected subscriber figures for ONdigital - is the plan to re-brand the ONdigital platform as 'ITV Digital' in an attempt to improve consumer loyalty, increase revenue per subscriber and reduce acquisition costs. The companies hope to achieve this by improving the geographic coverage to 70 per cent of the UK within three months, and by offering a more compelling suite of new channels, including the new 'ITV Sports Channel' to be launched in August.

"This is great news for viewers, advertisers and for the future of digital television in the UK. ITV will continue to offer viewers the best free-to-air sport and entertainment and its viewers now have now a clear and trusted brand to lead them into the digital and online world. "For advertisers, ITV channels will offer more commercial impacts and greater opportunities to buy advertising and sponsorship packages across free-to-air, pay
and online platforms," said Stuart Prebble, chief executive of ITV.

The real problem
While the new plan is a laudable attempt to present a united front to viewers and advertisers and trim operating costs, there is some concern that it fails to address the more crucial issue of how to persuade viewers to upgrade to digital - the future backbone of ITV's business.

"In my view it does not seem to solve a great deal," says Barry Flynn, senior analyst at media consultancy Digiscope. While it does represent a convergence of strategy and a new willingness for the companies to work more closely, says Flynn, it fails to offer those ITV viewers not interested in pay-TV any incentive to upgrade to digital. "The free-to-air aspect of the digital service has been missing from the equation," he says. And until this is comprehensively addressed, ITV will not be able to fully exploit the commercial benefits of the digital medium.

"There has always been the supposition that people would trade up to integrated digital television sets (iDTVs)," says Flynn; "and despite ITV's Stuart Prebble predicting each year that 'this Christmas iDTVs will take-off', they never have. This is a major problem that needs to be addressed," he says.

The failure of the population to embrace digital TVs means that ONdigital must subsidise the cost of each new customer by providing them with a free digital decoder to enable them to view the service via their analogue television. And while this is true for the other digital platforms, like for like, the others offer more channels and are therefore winning the battle for subscribers.

Future-proofing?
It is not just the low profile of free-to-air digital channels that are available, which is keeping people from upgrading to digital TV sets. There is a great deal of confusion regarding iDTVs in the market. "At the moment, if I go along to a shop and ask to see a digital TV set, I am just as likely to have them show me an analogue TV set with digital sound," says Flynn.

Moves are afoot, however, to help resolve this situation. There is a plan to identify each iDTV set with a DVB (digital video broadcasting) logo. Yet Digiscope's Flynn also argues that, while the DVB logo may help to sell a few more iDTVs in the short term, advances in technology and the market would make these at best incompatible or, at worst, obsolete within a few years.

"If you buy an iDTV today, while you may have a guarantee that it will be connectable to the ONdigital service, you have no guarantee that it will be connectable to the other digital platforms of cable and satellite. While ONdigital is making a module which plugs into the back of any digital TV, the other platforms are not," says Flynn. Furthermore, today's batch of iDTVs are incompatible with the latest digital television application programming interface, MHP (multimedia home platform) from the DVB consortium.

Next-generation idtvs
"From next year, everyone is going to start putting hard drives in digital decoders. So, if I get an iDTV today, I am never going to have this unless I upgrade," he says. And this is significantly out of step with the typical television buying cycle of the UK public, which is about 10 years.

"However, while ONdigital cannot compete with the other digital platforms in terms of number of channels, it competes favourably in terms of quality. If I want to watch a programme that is available on both ONdigital and Sky Digital (I have both), I turn over to ONdigital to watch it in widescreen because the sound, picture quality and viewing experience is better - but you have to have widescreen to appreciate it," says Flynn.

However, this is unlikely to persuade the millions of analogue viewers to buy digital in the short-term. ITV Digital will only begin to sign up a substantial number of customers once the various European standards bodies and manufacturers have reached some kind of status quo. Until that time, boasting about having the first digital terrestrial service in the world might not be the best way to attract an increasingly technically sophisticated audience.