Television

60 per cent of UK TV homes to be signed up to Pay-TV by 2008: Study

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MUMBAI: The UK pay TV market is currently at a crossroads. It was worth 4.41bn pounds in 2003. The market grew by 80.8 per cent since 1999 on the back of strong growth in subscriber numbers and a constant push by the pay-TV platform operators to raise the average revenue per subscriber unit (APRU).



By 2008 just under 60 per cent of TV households will be signed up to pay-TV services. The data is contained in a new report by Research and Markets Pay TV Market Assessment 2004. BSkyB, dominates the UK Pay TV market. It is both the leading platform operator and a leading content provider.



Its nearest rival is Telewest, which also acts as both a platform provider and content provider. The only other significant player is NTL, which although larger than Telewest in terms of its platform operations does not supply content.



By 2008 NTL and Telewest will have completed financial restructuring. They are set to merge with each other and should benefit more than BSkyB from the convergence of broadband Internet and pay-TV services.



By 2008 the multidigital TV home will be firmly established in the UK. Many homes will subscribe to both Freeview and a digital pay-TV service



Despite the consolidation of the industry, there is intesne competition which was heightened with the introduction of a digital free-to-air (FTA) competitor to the pay-TV market Freeview. As a riposte BSkyB recently launched a free digital satellite TV service. Freesat offers 140 channels for a one-off fee of ?150



A number of factors could lead to a radical change in the UK pay TV market over the next five years. These will affect both the overall size of the market and the competitive landscape.



The proposed switch-off of the analogue-TV signal between 2006 and 2010 will create a competitive battle to sign up the remaining 53 per cent of TV households that do not currently access digital TV.



The report notes that as of now Freeview appears to have an edge in this regard, as it is appealing to households that have been skeptical about subscribing to digital pay TV. With Freesat BSkyB is hoping that the absence of a subscription fee will lure new customers who may eventually switch to a pay-TV package when analogue TV is phased out.



However, the pay-TV operators need to seriously penetrate this market if they are to continue to enjoy rising subscriber numbers. This will call for a major rethink in their marketing plans, tariff structures and service packages.



By 2008, the market will take on a different complexion to the one seen today. In particular, interactive services, more broadly based family entertainment programmes and greater customer control over programme scheduling and start times will be commonplace. The market will also effectively split into two halves:



1. Full-strength segment. These are customers that access the bulk of the premium services available and pay a relatively high monthly subscription package for the privilege. These will be middle to high income earners.



2. The Lite segment. These are customers that access a restricted set of services and pay a relatively low monthly subscription package as a result. These will be high- and mid-income earners that do not want a

large number of channels and low-income earners that cannot afford the full-strength tariffs.



One factor that could change the landscape of Pay TV in the UK is if BSkyB's rights for Premier League football got seriously undermined after 2007. If this were to happen then either the cable pay-TV operators could improve their competitive position against the company or FTA terrestrial TV could become a stronger competitor against pay TV generally.

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