Pay-TV operators are failing to capitalise on the growth of high-definition TV (HDTV), according to information gathered in our Connected Consumer survey of over 4000 Internet users in four major European markets in August–September 2009. Overall, 42% of survey respondents own an HDTV set, ranging from 48% in the UK to just under 38% in Germany. Although a limited amount of HD linear content is available as free-to-air programming, most owners of HDTV sets are failing to get the most from their investment because, overall, only 27% of them take an HD content package from a pay-TV provider. Again, this varies significantly from one country to another, as shown in Figure 1.
Figure 1: Proportion of survey respondents who own an HDTV and take an HD content package, by country [Source: Analysys Mason, 2010]1
Of the countries included in the survey, the highest proportion of HDTV owners subscribing to an HD content package from a pay-TV operator, 46%, is in Poland. Most of the Polish pay-TV operators that include HD content in their portfolios offer low-cost HD channels or packages, and some, such as the satellite platform ‘n’, even include HD in their base-level offerings.
Somewhat surprisingly, the country with the second-lowest proportion of HDTV owners who take an HD content package from a pay-TV operator (24%) is the UK. BSkyB was the first to launch HD in the UK, in May 2006, and it remains the only service provider in the UK with an extensive HD portfolio, currently offering nearly 40 dedicated HD channels. However, take-up of its products was initially inhibited by the high price of the Sky+ HD set-top box: GBP299 (EUR339.30, at today’s exchange rates). It was not until this price was reduced to GBP49 (EUR55.60), in January 2009, that take-up moved beyond the early adopter phase, and penetration doubled to 16.8% in the nine months to September 2009.
The fact that more than 50% of HDTV owners do not sign up for an HD content package represents a substantial missed opportunity for pay-TV operators. They need to educate consumers that HD programming is necessary for HD-quality viewing on HDTVs, and also to make it more accessible by reducing barriers to entry in order to entice consumers to sign up for their services. Various strategies are open to service providers, including:
- maximising revenue from early adopters, then gradually reducing prices to drive mass adoption
- including HD channels as standard, thereby differentiating the service from those of other providers
- making a limited amount of HD programming available in entry-level packages, so as to highlight its benefits for subscribers and encourage them to upgrade to additional HD channel packages.
Regardless of the strategy they decide to adopt, pay-TV operators need to act quickly to make the most of this window of opportunity, which will gradually close as more HD content is made available on a free-to-air basis, primarily through second-generation digital terrestrial TV services using the DVB-T2 standard, or other alternatives, such as Freesat in the UK.
More data on consumer usage of TV and online video services, such as VoD and DVRs, in the major European markets of France, Germany, Poland and the UK is available in our recently published report, Video content survey: analysing TV and online video consumption and its accompanying data annex.
Another recent report, Monetising pay-TV services: content strategies, business models and pricing, aims to help pay-TV operators to structure their offerings so that they can present their customers with a multitude of upgrade paths, which will enable the operators to maximise revenue.
1 Survey question: “Do you subscribe to an HD content package?”. Base: respondents who have an HD or HD-ready TV, n = 1755.