Articles and whitepapers

The HDTV Revolution - an Interview with BSkyB (3/10/2005)

By Julian Mitchell, High Definition Home

BSkyB reminds me of Apple Computers with its silent progression to its ultimate goal. We know its high definition service is coming, we know that the reasons for it are to do with factors like subscriber saturation, FreeView competition, share price and achievable innovation - but we don't know much more.

Apple Computers uses the trickle of information to cause a torrent of interest from consumers - the same is happening to BSkyB with its HD news, but the public doesn't care... yet. All the noise is coming from the trade and its competitors.

The BBC has announced that it will have total HD production by 2010 and in the same breath has claimed an interest in how BSkyB gets on with its HD strategy. Most of the other channels have a 'wait and see' attitude - some of the advertising agencies are dealing in mixed messages and ignorance by saying things like 'HD costs more to shoot' so they won't be recommending it to their clients.

The fact is that when BSkyB starts its service there won't be a rush to sign-up, just like when Sky+ started - you could even go back to the introduction of colour. These technologies take time to 'bed-in', Sky+ now has 10 percent of all Sky subscribers, and when was the last time you saw a black and white set?!

Robert Fraser from BSkyB Corporate Affairs sets out the BSkyB HD service: "Its very important to us to be seen to be offering the most advanced television services available. Our customers expect that from us and we know that if we don't deliver, there are a great many other providers out there who would be very keen to win our loyal customers from us.

"HD comes at an interesting time in Sky's development in that we've been very successful with our Sky digital product, we've more then doubled our customer base since the launch of Sky digital. It's still a great service but it's not new anymore. When we market to new customers it's good to have something new in our armoury to re-invigorate the offer which Sky can make. Sky+ has done that very effectively.

"HD is pretty much unknown in the UK, but there are a number of things that give us some comfort in our belief that there is an audience out there who will be interested in this product. There's absolutely no doubt that amongst UK television viewers, there is strong demand for high quality video and audio. You only have to walk into an electrical retailer and see the big flat screen displays to see that viewers want a high quality television. That combined with the rapidly declining price of flat screen displays really gives us confidence that an equipment replacement cycle has already begun. We think it is going to be faster than the cycle when people switched from 4:3 to widescreen sets. Once viewers get a flat screen television in the home, they're going to want high quality content to show it off. We aim to deliver the most comprehensive HD package available."

The new HD STB

When BSkyB announced that their STB (set top box) would only carry HDMI connections, there was a flurry of protests on the AV forums - people called it a consumer scandal. So in an abrupt turnaround, BSkyB announced that initially analogue component would be supported, giving all those sets with only those connections the ability to watch Sky HD. As Fraser explains further: "In the initial batch of Sky HD boxes, there will be an analogue component output." He went on to explain that the second version of the box wouldn't have that.

BSkyB has already announced that the first batch of boxes will be made by Thomson and features an MPEG-4 chip alongside an MPEG-2 chip. "We're employing an advanced codec, so the technology that we're going to integrate within our box is really very new and simply doesn't exist today in any real form. We're dependent on a number of variables in terms of delivery of technologies. However we're still aiming for 2006

Sky's proposed STB (made by Thomson) containing a 160GB drive and the elusive MPEG4 chipset.

"When you come to get your HD service you'll need a new HD box which will have an integrated PVR (Personal Video Recorder - Ed) and there will be a package of HD channels available which will be integrated within our existing EPG (Electronic Programme Guide - Ed) so as with Sky+ it's a seamless transition for the viewer. If you're familiar with the Sky EPG, with Sky+ you're able to get to grips with Sky+ without reading a manual within a couple of minutes. We'll aim to integrate our HD service in a similar way.

"It is going to be a niche service at launch. It will be a premium proposition, but one that is priced in a way that is attainable. There will be a variety of content: sports, movies, drama, factual and perhaps some surprises too."

From launch, Sky Sports HD will offer full live coverage of the Premiership in HD, with the added benefit of Dolby Digital 5.1 sound. Also live rugby from the Guinness Premiership, mixed with other HD sports programming to be confirmed closer to the time of launch. A maximum of 100 premiership games is about the amount already offered for pay-per-view by Sky on its SD (standard definition) service.

HD to acquire customers

BSkyB is looking long-term and learning from the time and marketing it took to launch its other firsts: digital TV, interactive TV and PVRs. Their research shows them that different viewers want different experiences, something that Richard Freudenstein, COO of BSkyB spoke about at the DVB Conference earlier this year: "Being able to offer different products that fit the needs of different audiences is key to our growth strategy. To achieve our target of 10 million customers in 2010, we are broadening the appeal of Sky beyond its traditional strengths in premium sport and movies.

Richard Freudenstein, COO of BSkyB

"In the past, Sky has been very successful with a focussed marketing strategy aimed at selling our top-tier package. The scope for continued growth at the top tier is by no means exhausted. But in the future, we aim to be equally successful with a segmented approach that highlights the benefits of other channel packages that cater to the needs of individual consumers."

"That is why it is important to state that we do not regard HDTV simply as an upgrade path for existing customers. We see it as a customer acquisition strategy as well. We know that concern about programme quality is one of the reasons why some viewers have resisted digital pay-TV. It is an unfounded, but nonetheless real perception, that pay-TV represents quantity over quality. Those discerning consumers are precisely the audience that is likely to be interested in a high-end proposition that focuses on the quality of the content and the viewing experience.

"We are pretty confident that HDTV will allow Sky to re-start a conversation with many people who currently believe that pay-TV is not for them. Some consumers are concerned that the sheer volume of choice on Sky digital might be overwhelming. They think that they might lose control over their family's viewing or that they will simply not have time to watch the programmes that we offer. When they hear about the control and flexibility of Sky+, each of those concerns is alleviated and the barrier to take-up falls away. We think HDTV will have a similar effect."

"As the cost of HDTV production and equipment falls, the volume of HDTV output will multiply. To its great credit, the BBC has already begun producing drama and documentary programming in HDTV and has committed to the migration of its entire production output by 2010. Competitive pressure will compel other broadcasters to follow if they want to meet the audience's expectation of high-quality pictures".

Pushing HD content

BSkyB HD will also use the PVR or 'local storage' as they call it, for more on-demand services. "It is why we regard the launch of HDTV as more significant than a shift from one form of picture resolution to another. HDTV will offer the opportunity to develop sophisticated services that meet consumer demand for flexibility and convenience."

Those services might include the much talked about 'PVR-to-go' market that would pit BSkyB against Apple and Pace Micro Systems in the proposed video iPod marketplace.

Supporters of HDTV are usually passionate about it - now tipping points are appearing all over the place, not least the World Cup and The Olympics. Astra has already announced that it will carry 20 more channels of HD from the end of 2006, and conservatively mentions 100 by the end of the decade. Depending on who you talk to, around two million HD Ready television sets will be sold by the end of next year, and three million by the end of the following year. HDTV is coming, so join the resolution revolution!

Julian Mitchell is the Publisher of High Definition and High Definition Home magazines. To subscribe, go to:

www.definitionmagazine.com