News

U.K. Digital Services Roll Out Slowly

8/02/1998 8:00 PM Eastern

London -- British Sky Broadcasting
"soft-launched" its 200-channel digital bundle June 22, but since then,
sightings of digital direct-to-home decoder boxes in Britain have been rare.

Early in July, a spokesman for Pace Micro Technology plc
said it had delivered the first batch "of 100 boxes" to Sky's West London
headquarters, and Pace was stockpiling boxes as they rolled off the production line. But
no boxes have been issued to subscribers, or even to partner broadcasters.

Sky is currently transmitting about 180 separate
digital-video channels and another 48 audio channels from Music Choice Europe. Included in
this total are channels from the British Broadcasting Corp. and Discovery Communications
Inc.

The soft launch was aimed at current analog subscribers,
but so far, most of the information that they have received about Sky's digital
service has been very general. Existing analog subscribers received a letter from Grant
Harrison, Sky's director of customer care, late last month, touting "frozen
prices for the next year" and "new, improved movie channels ... and Sky Digital
is coming, too!"

The first trade ads for Sky's new service have just
started to appear. On July 30, Sky began presenting more details to analysts and
investors.

Sky's competitor, digital-terrestrial service British
Digital Broadcasting, also plans to launch in the fall, but it won't disclose the
date.

The most tangible new digital effort will come Aug. 10,
with the launch of Sky's first new digital channel, 24-hour service Sky Sports News.
At about the same time, Sky's first 11 digital pay-per-view channels will appear.

Sky's consumer advertising will break Sept. 10, with a
$5 million rebranding campaign for its movie channels.

Last week, BDB disclosed more details on its plans,
including unveiling the platform's consumer brand name, "ON-digital."

"We want a brand that is contemporary, modern and
relevant to our customers," BDB CEO Stephen Grabiner said. The service will use
digital-terrestrial-TV distribution for a smaller multichannel package than Sky's.

Like Sky's digital start, specific details about the
launch of ON-digital are unclear.

BDB has been coy about revealing ON-digital's actual
launch date, saying only that it will be "sometime during the fourth quarter of this
year," according to Grabiner. He added that BDB will spend some $66 million on
advertising, and even more on box subsidies.

ON-digital's pitch is entirely different than
Sky's, and it offers only about 16 pay channels. The program lineup is not yet fixed,
but the service will also include about another 16 free-to-air digital channels from
Britain's public and commercial networks.

"People don't want hundreds of channels,"
Grabiner said, maintaining that his service is using its limited bandwidth to offer what
he called better channels, rather than more services.

By the Christmas season, the real fight for British digital
customers will be on, and the potential of the market is seen as huge.

John Birt, director general of the BBC, is predicting that
one-half of all U.K. TV households -- about 11 million homes -- will have
digital-multichannel pay TV by 2003.

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