By Mark Holmes

High-Definition Television (HDTV) is a hot topic and one that offers strong revenue opportunities for companies in the satellite sector. Satellite pay-TV operators such as the U.K.’s BSkyB and Premiere in Germany will look to get a competitive edge over cable and other forms of competition. Satellite operators such as Eutelsat and SES Astra will hope the demand for HD content will lead to more lucrative deals as they look to sell more capacity. For broadcasters, HD will become another differentiator in the battle for ratings. Throughout the next year, there are likely to be significant developments as HD should further penetrate the public consciousness.

All the dynamics are place. The price of HD compatible equipment is coming down and the success of HDTV in Asia and North America will undoubtedly have an effect on Europe. Asia Digital Media for example, a digital content transaction platform designed to distribute HDTV satellite broadcasting, is currently developing its secure technology solutions to enable HD programming of the 2008 Summer Olympics in China, high-speed Internet and online transaction services to the Chinese market.

And even though the Rainbow DBS service is no longer delivering HD-dedicated programming in the United States, North American service providers continue to distribute HD content through established platforms. David McGlade, CEO of Intelsat Ltd., says that his company’s broadcasting clients are growing in HD programming and that Intelsat has had a long history of transmitting HD broadcasts of major entertainment events.

"We are seeing the acceleration of HDTV in the Americas and that is driving the activity in Europe, particularly in the contribution/distribution space to get coverage of live events for the U.S. audiences," says Warren Hobson, director of corporate strategy at Tandberg Television. "The fact that HD is accelerating in North America actually has something of an impact in the way the European market is developing. The whole HD dynamic in North America is helping to drive down the cost of display devices. The benefits of lower cost displays will feed directly into the European market."

It is not just the price of displays and events in the United States that fuel HD growth. There are major events on the horizon that could catapult HDTV’s popularity, such as the upcoming World Cup, which takes place in Germany in 2006. With global audiences and matches to be screened in HD, this event could have huge bearing on making HD a must for consumers.

The other key aspect is that HD content and packages could become part of the pay-TV battle between cable, satellite and Internet Protocol Television (IPTV) platforms. So far in Europe, satellite pay-TV operators have been quicker out of the blocks in providing services such as Personal Video Recorders (PVR)) and HDTV. BSkyB and Premiere will blaze a trail for HDTV for pay-TV operators, possibly driving satellite rivals to develop competing offerings. This could drive additional subscriber growth in established pay-TV markets and also boost average revenue per unit for established pay-TV audiences. With competition not just from cable, but IPTV and digital terrestrial television, satellite pay-TV platforms will need to use every weapon in their armory to grow strong businesses.

Operators Focus on The Opportunity

SES Astra and Eutelsat are among the operators who are closely watching the HD developments. Alexander Oudendijk, senior vice president of sales and marketing at SES Astra, expects significant developments to happen by 2006. "We will see Premiere launch three channels this November and we will probably see CanalSatellite launch at least one channel before the end of this year. BSkyB will launch in 2006. So, I think the real impact for HDTV will come in the first part of 2006."

Oudendijk also expects significant developments to take place in Germany. "We expect Premiere will go first with a three-channel HD package," he says. "The first push will come in the pay-TV market. But commercial broadcaster ProSiebenSat is also very keen on HDTV. There is also a chance they may do a full HD launch once Premiere has launched. I don’t think this will happen in 2006, but we may be surprised."

Eutelsat is also confident that throughout the next 12 months the HD industry will really crank into gear. "It has been marked already by increased collaboration between content providers, retailers, operators and TV set manufacturers to step up the number of curtain-raiser events that will build consumer awareness and to rollout the HD ready label on new TV sets in order to reassure buyers that the product in which they are investing is compatible to view HD channels," says Olivier Millies-Lacroix, commercial director at Eutelsat.

The quality of HD content could become a key weapon for satellite pay-TV operators as they try to gain an advantage. Millies-Lacroix added, "We can expect markets used to the concept of premium video will be the early adopters of HDTV, particularly France, Italy, Germany, the United Kingdom and countries in Scandinavia. Pay-TV operators are banking on the step change in picture quality afforded by HDTV which will fit into their customer acquisition strategy."

In the United Kingdom, according to BskyB, in the first three years following the launch of its digital offering, customer research showed that the main reason for digital take-up was improved picture and sound quality rather than channel choice, Millies-Lacroix adds. Another development that could influence the adoption of HD is the move to the MPEG-4 data transmission standard for HD broadcasts, which affords economies of scale for broadcasters and local storage, which will enable pay-TV platforms to develop new pay- per-view models for on-demand HDTV content such as films, he says.

The Big HD Sell

While satellite operators are confident that HD will enable them to boost revenues, it will be the content providers and pay-TV operators that will play a key role as they ramp up their HD content offerings.

Joseph Guegan, executive vice president in charge of technology at France’s Canal+, says the company had a three-step plan in the HD area.

"We have started at the end of March putting together the infrastructure, planning everything and starting demonstrations," Guegan said. "We will have a demonstration channel on Astra in June, which will go to a promotion channel, which will be a kind of teasing channel for our set of HD channels on satellite in spring 2006."

DTT will be a key influence in the drive toward HDTV in France. Guegan admitted, "Thanks to a decision made in France about DTT, which is based on MPEG-4 for pay-TV, we will have to put our infrastructure in line with MPEG-4. That is going to happen sometime between September and December. What we do is adapt that to satellite in terms of the rest of the infrastructure. That is the good news in terms of having MPEG-4. It is quite expensive to go for HD and multiple premium channels and you must have a critical size to do it."

CanalSatellite will begin delivering HD-compatible set top boxes in September, and once some premium channels start offering HD content, it will have a snowball effect on the market, Guegan says. "I think that next year HD will make the first impact. I am not sure it is going to be huge in terms of numbers of subscribers. It is going to be big in terms of the improvement of quality of image. That is going to be the reference for premium channels in France and in Europe. As soon as some of the pay-TV players such as Canal+ are going to offer that, the others are going to align themselves. They have no choice. Premium is premium and it will be HD."

HD Beyond The Majors

While most of the HD focus centers on markets such as the United Kingdom, France and Germany, other markets will also see HD content increase. The CMore Group, a Nordic-based pay entertainment provider with more than 770,000 subscribers in Scandinavia, is preparing to bring the first wave of HD content to audiences in the Nordic region.

Marc-Antoine d’Halluin, CEO of the CMore Group, says the company is working in conjunction with satellite pay-TV platform Canal Digital to bring HD content beginning in September. "It is truly a fantastic experience for a viewer standpoint," d’Halluin says. "There is a huge chunk of movie lovers in the region. They are really going to enjoy that channel and they know more will come in the next couple of years."

But while the company aims to be a pioneer in bringing HD content to the Nordic region, d’Halluin admits it may be a slow process. "The take-up of HDTV in the Nordics will be slow in the beginning, because what you need is a new decoder and the appropriate TV set," d’Halluin said. "You also need the appropriate decoder box, so it is going to be slow. These boxes are more expensive than the basic one. But, the early adopters are going to be rushing to it in the way HDTV has been successful in [other regions]."

The tendency when it comes to HDTV is to talk about the future. Euro1080, a pan-European channel provider is already pumping out HD content to homes across Europe and has close to 100,000 customers. Gabriel Fehervari, the CEO of Euro1080, believes the availability of set top boxes is a key issue for HD progression in Europe. "Premiere, BSkyB and TPS have announced plans but it is not really clear when the new boxes will be there," he says.

Euro1080 is hoping to bring its HD content to more markets across Europe. The company is excited about the prospects in Turkey, Fehervari adds. "In the first stage, we will try to get into these markets because there is no HD there. … If you take a country like Turkey, there are 18 million households there. It is also a country that is very satellite- orientated, which makes it relatively easy to penetrate. It is a lot easier than somewhere like Belgium where there are a lot of different cable companies to persuade."

Euro1080 wants to play a key role in combining with satellite pay-TV operators in terms of HD content. Fehervari believes the company’s approach is complement to more mainstream HD entertainment. "A German channel like Premiere will focus on the Bundesliga (German league soccer)," Fehervari says. "We are not interested in this. We will not show local football. We will not show movies. But we will show other sports events like world championship judo or table tennis. It is not that we are showing lower level [events], but we are showing other types of sports. We focus on these sports, rock concerts, classical concerts and things that Premiere would never bring on the channel."

While more HD channels will undoubtedly provide competition for Euro1080, it is something that Fehervari is encouraging. He believes that people will be drawn to content in HD that ordinarily they will have no interest in. "In a certain way, we support each other. The phenomenon is if you have watched HD and you have enjoyed it, you will look for any HD you can receive. It is like black-and-white to color. Once you have seen color, you don’t want to go back. Somebody may never watch an opera in [standard definition], but in HD they might watch it."

The future looks bright for HDTV. If all established business plans continue on successful paths, HDTV will become more mainstream, in more markets throughout the world and providing more revenue streams for content distributors, equipment manufacturers and satellite service providers. The hard work on the technology side already has begun in earnest. Now is the time for programmers to create more HD content for distribution.

Mark Holmes is senior editor of Inside Digital TV and International editor of Satellite news, both sister publications to Via Satellite magazine.