[Satellite Today – 6-19-08] Freesat aims to establish a strong niche for itself in the U.K. digital TV market. The new FTA satellite offering, from the BBC and ITV, which was launched in May this year enters into a crowded market where pay-TV satellite (BSkyB) has around nine million subscribers and the Digital Terrestrial Television (DTT) offering, Freeview now has 15 million connections in the U.K. Emma Scott, the managing director of Freesat, admits the new offering has “modest ambitions” in terms of the impact it may have in the U.K. digital TV market. She commented, “We are launching into a much more crowded market than with Freeview. There was a real market gap when Freeview launched and we believe there is a market gap for Freesat. We have got modest ambitions. We are not looking to take over Freeview. We are there to deliver value to people. We are very complementary to Freeview. We offer a higher end capability to Freeview. If you want a basic 40 channel package and a one-off purchase, Freeview is the choice. If you want a bit more future focus in terms of technology, Freesat is a fantastic next step on.”

“Compelling National Proposition”

However, with more and more people buying HD ready TV sets, Freesat could very easily find a niche for people not prepared to pay for BSkyB’s more expensive HD offer. This could be the thing that really propels the service forward. “I think the HD element makes it a compelling national proposition, because the ability for people to get subscription-free HD programmes from the BBC, and now ITV. That is the making the most out of the 9.6 million+ HD ready sets in the country, where their only other options are with subscription based services,” noted Scott.
With the demand for HD content set to increase, satellite could come into its own here in the U.K. Scott said, “The difference between us and DTT is that there are far less capacity restrictions on satellite. You need to buy HD capacity and a large number of broadcasters are interested in broadcasting in HD. As with most things, it is usually the public service broadcasters that lead the way. It is a natural progression. HD is a growth market. We know there is untapped demand there. There are all these TVs that people have bought. I think the more people watch in HD, the more they will expect it from their linear broadcast as well. I think what you are finding in the U.S. is the more people are watching HD, the less likely they are to go back to SD.”
Certainly, Scott hopes the HD component will increase over the next 12 months. At the moment, the BBC HD channel is available and ITV HD content is also available, but Scott expects this to increase. “I would hope we would have more HD content up there in 12 months time.” says Scott. “There are two ways of looking at it. There are channels, which are costly to put together in terms of schedules and programming. I think the approach that ITV is taking is a really innovative one. They are using red button technology and taking viewers into the HD feed and then at the end of the programme step out of it. This means broadcasters can incrementally provide HD programmes on a step-by-step basis. It is then far less costly to put a toe in the water. We will be encouraging people to use red button technology, as well as putting together linear channels. It is a long game.”

Sophistication

The service, while being a free service, and mainly aimed at areas in the U.K. that cannot get terrestrial reception is nevertheless an impressive service, and gives users access to a fairly sophisticated service for a one off cost (set-top box and satellite installation). Scott says, “We are very excited about the Freesat HD PVR and hope it will be in the market this Autumn/Winter. They will have big hard drives so you can record HD content and will allow the possibility of further innovations in the future. We could also take iPlayer and Kangaroo, and viewers can save content onto their hard drives. I think Freeview Playback and Sky+ have already proved that people recognize the benefit of digital recording equipment and save content. I think HD will benefit from that even more. The ability to record programming is amazing. I think the ability to record HD programming will be key.”
Interactive and enhanced services will become the norm on the platform. Scott commented, “We have put an Ethernet port into all our equipment to allow a level of future focusing. You can deliver enhanced interactivity. We are now planning to put a software download so people who buy the early STBs will be able to get things like iPlayer, and then things like Kangaroo. We are trying to meet the needs of people. It offers an extra dimension. Streamed content is not as good quality as satellite, but people understand that.”

The Real Question

The real question is will people that already have the Freeview service, or even subscribe to BSkyB be tempted by the Freesat service. When asked about the potential numbers of households who may take Freesat, Scott said, “There are analogue and digital homes, which we hope will see the benefit of Freesat. Satellite gives a far greater choice in terms of the number of channels, compared to terrestrial broadcasting. There is greater choice. Things like HD are possible at a much cheaper price via satellite than they are via terrestrial. The HD market will grow on the both the pay and free satellite market. It is not just satellite technology. We have tried to put things like an Ethernet port into receivers, which will allow people that have broadband at home to get iPlayer via the TV for a one off purchase. It is about harnessing the capabilities of the satellite platform and marrying that with what we know consumers want.”

The Right Time

Significantly, Scott believes Freesat has found exactly the right time to launch into the market, with the HD element of the service capable of being its x-factor for customers. She said, “HD has only really come into its own over the last 12 months. HD is a growing market in places like the U.S., Japan and Canada. In a way, we have just launched at the right time. I think there is an inflection point, where a lot of these technologies that have been talked about for years, HD, push VoD, True VoD streaming. Everyone has been talking about them for years, but they have only just becoming available in a mass consumer way. It is absolutely right there should be a free version of those things. None of those services needs to be intrinsically tied to pay-TV. They are technological innovations and there is nothing to stop the likes of Freesat offering that type of functionality to consumers.”