The Freeview revolution


The Freeview revolution is about to start. All it needs is content, an audience and advertisers.

The new digital platform is up against Sky TV’s dominance in sports and other core content areas, so it is easy to pooh-pooh its chances.

Most market analysts certainly view it as being little threat to Sky in the short term at least.

But despite the limited growth expected in the early days, many believe it marks a significant turning point for the free-to-air TV industry.

Eric Kearley, a British television executive TVNZ hired to create its first two Freeview channels, has no doubts it will take off quickly.

He thinks it will appeal to the large number of people who would not subscribe to pay television but who want more choice.

“Freeview will have an impact. You would have to be an ostrich with your head in the sand if you believe otherwise,” he said.

TVNZ has for years watched the relentless drift of its audience to Sky, which now has 42 per cent market share.

Even if it does not have an immediate effect on Sky subscriber numbers or profits, Freeview will change the dynamics.

But the first part of the Freeview platform – which will be delivered by satellite – is likely to broadcast to only 30,000 people.

That’s an estimate of how many people have paid the $300 for a new set-top box that will convert existing free-to-air channels – TV One, TV2, TV3, C4 and Maori TV – to a digital format.

The second part of Freeview – involving digital TV signals sent from “terrestrial” broadcast towers owned by the Government transmission company Kordia – starts early next year.

Sky Television chief executive John Fellet is confident Freeview will not hurt his company.

But Freeview consortium general manager Steve Browning is surprised at that confidence.

“It comes down to common sense,” he says. “When you lose a monopoly then it is going to have an effect.”

Fellet’s view is also challenged by Spectrum Strategy Consultants, the firm whose report on free-to-air digital TV last June underpinned the Freeview plan.

In particular, the consultants predicted that if there were no free-to-air digital platform, Sky would be in 63 per cent of homes by 2015.

With a free-to-air digital rival, it would be in 51 per cent of homes. By 2020 the gap would have widened with 78 per cent, instead of 57 per cent.

Those figures suggest Freeview will be a cap on Sky’s growth. Fellet is unimpressed.

“I would be more interested in the report if it was paid for entirely by the Government, when in fact it was half paid for by the free-to-air channels,” he said.

“The report makes lot of assumptions such as comparing the situation with Freeview in Britain where the cost structures are different and there are 30 good channels. They are also assuming Sky will be standing still and not increasing its own channels.”

Fellet said that despite the growth of the British version of Freeview, Rupert Murdoch-controlled BSky-B had grown as well.

“People who would not normally have got pay TV went on Freeview, they liked it and decided to get more channels,” he said.

“If Freeview hurts us as much as it hurts BSky-B, I’ll be happy.”

But the reality is Sky lobbied heavily against the Government-backed Freeview and argued Sky’s own infrastructure could be used by free-to-air channels in the future.

Labour politicians were wary of leaving the free-to-air sector and its dream of public service broadcasting in the hands of Rupert Murdoch-controlled Sky.

Then last year Sky went off the air for a while when its (since replaced) satellite went out of orbit, an indication that Freeview’s unusual strategy – using both satellite and terrestrial – made sense.

But even if Sky is left unscathed by what is initially just a new distribution system, the arrival of a state-subsidised system marks the end of an era for Sky, which has played the political game to maintain its unregulated monopoly since it started in 1989.

CanWest MediaWorks New Zealand chief executive Brent Impey says with his company in negotiations to be sold by its Canadian owners, he won’t even look at TV3 introducing new channels for three to four months.

And even then the small number of viewers means the notoriously frugal broadcaster will be in no rush to spend money on little-watched channels.

The Government has coughed up $79 million for TVNZ to put together a new ad-free “family channel” launching on September 30 and a 24-hour news channel next March.

Sky-owned Prime will join in on the terrestrial service and Kordia is selling capacity at around $700,000 per channel per year to other new players.

In theory, Browning said, Freeview could have 12 or 13 channels next year.

But the “chicken and egg” problem is when to pay for content when there are no viewers who can attract advertisers.

Whatever happens, digital is here to stay. Traditional analogue broadcasts will switch off midway through the next decade.

The job next is to get content, viewers and then advertisers to make it pay.

Photo: Freeview chief Steve Browning says the free-to-air digital TV platform could have 12 or 13 channels next year. Photo / Dean Purcell

NZ Herald

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About the author

Kyle Wadsworth

Kyle Wadsworth is a trained multimedia journalist with a passion for film and television - notably Westside and Outrageous Fortune! Also known as TuiKiwi (the name of which has also featured on Outrageous Fortune as a guest-starring beer brand).
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