DTT - The People's Choice
Tuesday
4 March 2003
Printable version
Delivered
at the FT New Media Broadcasting Conference
Good Morning.
It is almost
a year since ITV Digital collapsed.
If this
conference had taken place in early November last year, not even the
optimists amongst us - including me - would have predicted that sales
of Freeview adaptors in the UK would be so good.
They are
already approaching 500,000 units in just over four months since its
launch.
Indeed
probably none of us would have predicted that in the Barb panel for
March the estimated number of live 'Freeview homes' would be nearly
1.4m.
Overall
this now leaves Freeview bigger than the highest ever level reached
by ITV digital.
Moreover,
with no churn on the platform and with sales still going strong, this
figure can only keep going up!
I think
I have been asked to speak today as the person who happened to join
the ³ÉÈË¿ìÊÖ just before the busiest launch programme in its history. By
chance of timing, I’ve been involved at some level in every single
³ÉÈË¿ìÊÖ digital launch of the last year. Unexpectedly, I also found myself
leading the launch of Freeview for the ³ÉÈË¿ìÊÖ last Autumn.
Against
the above background I want to briefly cover four areas.
Firstly,
a perspective on the new TV and Radio services that the ³ÉÈË¿ìÊÖ has launched
in the last year, and why we do not plan any more launches in the foreseeable
future.
Secondly, why Freeview really is 'the people's choice' - for a major
section of the UK population.
Thirdly,
why we think launching Freeview was probably the most important thing
that the ³ÉÈË¿ìÊÖ did last year - and why it provides a key missing piece
of the jigsaw in moving to a fully digital Britain.
And finally,
why I think that the use of marketing is more important than ever before
for the ³ÉÈË¿ìÊÖ in a world of digital broadcasting.
So then:
Firstly
- The nine ³ÉÈË¿ìÊÖ launches of the last year
The launch
of ³ÉÈË¿ìÊÖ THREE on the 9 February, was a day of huge significance in the
³ÉÈË¿ìÊÖ. This was the last of an unprecedented nine TV and Radio launches,
which had started with the launch of 5Live Sports Extra on 2 February
2002. In just over one year, we introduced almost as many services as
the ³ÉÈË¿ìÊÖ had launched in its entire history.
This was
not the ³ÉÈË¿ìÊÖ going mad - although doing so much in such a short space
of time did sometimes feel like it. Even in my busiest periods in nearly
17 years at Unilever, both in a variety of Marketing and General Management
roles, I had never been involved in such an intense launch programme.
It was
not about 'empire building' and expanding for the sake of it. Rather
it was an organisation making a critical but one-off transition. We
were adjusting from a portfolio which was suitable for the old 'analogue
world' of relative scarcity, to an appropriate public service broadcasting
portfolio for a new 'digital world' of relative plenty.
The services
we launched are the implementation of the vision that Greg Dyke had
laid out in his MacTaggart lecture at Edinburgh a few years ago. Each
service had been based on careful analysis and understanding of the
audiences at which they were targeted.
After all,
we had the responsibility to provide distinctive, high quality and ambitious
programmes in a digital world that the public had come to expect from
us in the old analogue world.
These new
services have included:
- Children's
TV – in true ³ÉÈË¿ìÊÖ tradition, advertising free, with a high British
and educational content;
- Radio
for both Black and Asian audiences;
- drama
and comedy speech radio;
- the
arts, culture and ideas of ³ÉÈË¿ìÊÖ FOUR;
- the
new talent and British production we are supporting with ³ÉÈË¿ìÊÖ THREE.
This one-off
transition in our portfolio is now complete. We now have the right line-up,
and there will be no more new services for the foreseeable future.
Our attention
is now firmly on making sure these services 'bed down' quickly and are
as strong as possible. Critically, we also want to make sure that as
many people in the UK can get our full range of services at the earliest
opportunity.
In the
words of Lord Reith, the ³ÉÈË¿ìÊÖ is here to do what it has always done -
'To bring the best of everything to the greatest number of homes'.
That brings
me to my second point - Why Freeview really is 'the People's
choice'
Freeview
has become central to the ³ÉÈË¿ìÊÖ's digital strategy.
There is no point in having these new services if not enough people
can see them. However we very nearly didn’t get to where we are
today.
This time
last year, digital TV was in trouble.
Digital
penetration was stalling, and millions of consumers were either confused
or quite clear that digital was not for them.
To make
matters worse, in March 2002, we had the collapse of ITV digital. Its
eventual demise, after a long and painful death, could have destroyed
consumer confidence for good. The problems caused by this, including
widespread consumer confusion and apathy, made the prospects for digital
development look worse than ever. There was a real chance that DTT would
not survive in this country.
Clearly
it was time for some fresh thinking.
We felt
it was critical to reach an understanding as to why people had not yet
gone digital. We did several major pieces of research to really 'get
underneath the skin' of what the 15 million households (over 35 million
people) who were still in analogue only homes really felt.
Out of
all the work we did, we found that the 15 million households split into
three groups:
Firstly
there were five million or so 'positives' - people who broadly liked
the idea of pay digital.
They liked
the idea of premium sports and movies, and didn't mind the thought of
paying for them along with the many other channels and choices.
Typically
this section of the audience was younger, male, and just hadn't got
round to going digital yet. Over time though, many in this group will
go towards pay digital.
Sky, cable
and ITV digital had all been competing primarily for this group. With
hindsight, we now know that three pay platforms have not worked anywhere
in the world, and there’s no reason to believe that Britain could
have or would have been an exception to that rule.
The second
group we found were people who were simply 'unsure' or confused about
digital.
The third
group were plain 'negative'.
I now want
to show you a video of some ordinary consumers who were in these two
groups – the 'unsures' and then the 'negatives'.
We found
that there were around four million 'unsures'. The sort of people you
saw on the video. A mix of ages and social grades, but with one thing
in common - they were confused.
Finally
we found there were around six million 'negatives'. Again this group
covered a wide range, but were older, slightly more upmarket, heavy
TV viewers with a significant minority living alone.
From our
work, we found that for many in these last 2 groups - the 'unsures'
and the 'negatives' - what they wanted was something clear and simple
which would cut through the apathy and negativity.
Out of
this insight - and counter to prevailing wisdom at the time, came the
real breakthrough - THE BIRTH OF FREEVIEW.
This was
a completely fresh start for DTT. For a one off payment of less than
£100, you could now get a range of up to 30 TV channels (importantly,
not too many), including interactive content, and a range of Radio networks,
free forever!
We also
were addressing the significant technical issues the platform had suffered,
and promising a robust and improved quality of service.
Instead
of four - five channels in your 'old analogue world', this represented
a compelling alternative, especially as it followed the 'old model'
that this audience had grown up with.
Once you
had bought the equipment, just like a TV or radio, you would never have
to pay again. Suddenly with Freeview we had a proposition which really
could become the people's choice - certainly for many of these 'unsures'
and 'negatives'.
We won
the bid for the ex-ITV digital licences on the 4 July.
We launched
the Freeview service on the 30 October - less than four months later.
Despite
what the cynics said, the three companies, ³ÉÈË¿ìÊÖ, Crown Castle and Sky
worked very well and closely together throughout the period and, to
this day, we continue to work in a way which harnesses the different
strengths of each player. We believe this is a world record for the
launch of any digital platform.
As well
as the basic simplicity and appeal of the consumer proposition, there
were other crucial things which were achieved in this period.
These included
fixing the technology problems, working out how to deal with the coverage
issues, making sure all the channels were up and ready in time. We also
had to liaise with the all important retailers and manufacturers who
would be selling and making the adapters and iDTVs.
Above all
we believed we had created something which had responded to the market
failure of ITV digital and which could truly meet a big consumer need.
This brings
me to my third point, which is why launching Freeview, along
with our partners Crown Castle and Sky, was probably the most important
thing we did at the ³ÉÈË¿ìÊÖ last year, and why it provides a key missing
piece of the jigsaw in moving to a fully digital Britain.
There was
now a major new way for millions of our licence fee payers to receive
all our services, and the Freeview format meant it appealed to the very
audiences that had previously been least likely to go digital.
The initial
response has surprised us all. In just over four months, we have had
well over two million inquiries in our call centre and on our website.
More importantly,
as I mentioned earlier sales of adaptors since launch are around 500,000
units.
As one
retailer put it, "Freeview adapters are selling like hot cakes".
This has
also surprised retailers and manufacturers, and this sales level has
been achieved despite widespread out of stocks. In total 1.4 million
homes (over three million people are already enjoying Freeview).
There are
two other broadly encouraging pieces of information.
Firstly
return levels have been lower than expected - in line with the normal
level for electrical goods, and substantially below the old ITV Digital
levels.
This suggests
that the technology improvements and discipline about selling to households
in coverage are both working.
Secondly,
the profile of people contacting our call centre do have a different
profile to the average pay subscriber eg. they are typically older,
and more upmarket. This is a sure sign that Freeview is appealing to
a different profile of audience.
This is
a crucial point.
Freeview
does appeal to a different audience. It is entirely complementary to
pay digital. It may be a key missing piece of the jigsaw, but it is
not the only piece.
There is
now something for everyone. For many - pay digital will still be the
right approach. For a fast growing number of others, Freeview is the
right offer. For some, there will be room for both, with pay digital
on the main TV, and Freeview providing a good option for the TV in the
bedroom or kitchen.
What is
clear, however, is the fact that Freeview is on course to become a vital
third platform in the UK market.
Finally,
the Freeview project, and our other activity in launching and promoting
the new ³ÉÈË¿ìÊÖ digital channels, has demonstrated how the ³ÉÈË¿ìÊÖ legitimately
uses modern marketing techniques.
Indeed,
this is more vital in a world of digital broadcasting than in the old
simpler analogue world.
It starts
with making more effort to better understand the audience. This is an
important priority for the ³ÉÈË¿ìÊÖ going forward.
Indeed,
this was crucial in coming up with the insight to develop the Freeview
idea in the first place.
With all
the confusion, clutter and noise of the modern world, it is critical
that we keep our messages to the audience as simple as possible.
It is also more important than ever that we communicate to our audiences
the full range of services and programmes available to them –
after all, they pay.
The trick
is to give people the information they need. This might be the choice
between a pay or free digital package. This might be the choice between
different digital channels. It might be simply a choice about which
programme to watch. But it is always about creative excellence, giving
our messages in an interesting way, and it’s a compliment when
people notice.
Even though
a small minority criticise the ³ÉÈË¿ìÊÖ for marketing and trying to promote
our programmes and channels, the vast majority of the public like our
communication and find it really helpful.
With great
digital services and programmes now available from the ³ÉÈË¿ìÊÖ, it all comes
back to wanting as many people as possible to get them as soon as possible,
and helping them find the programmes and services most relevant to them.
For this
reason over the years ahead, the ³ÉÈË¿ìÊÖ will continue to promote, hard,
both our digital channels and services and information on how you can
get them.
Indeed
our next campaign for our digital TV line up starts later this month
- and will run right through until after Easter. This will be as big
– and, we hope, as successful - as our first digital TV portfolio
push in November / December last year.
We will
also be doing our first major push for our digital radio line-up in
June this year, with more significant activity planned for the Autumn.
To conclude:
- Firstly,
the ³ÉÈË¿ìÊÖ has now launched all our new services. There are no more planned.
We have made the transition in the ³ÉÈË¿ìÊÖ portfolio from an analogue world
to a digital world.
- Secondly
we at the ³ÉÈË¿ìÊÖ really believe that Freeview is the 'People's choice'
- for many of the 15 million households who are yet to go digital.
- Thirdly,
we believe Freeview is a key missing piece of the jigsaw, and provides
a key complementary offering alongside Cable and Satellite.
- Finally,
in the more complex world of digital broadcasting, modern marketing
techniques are more important than ever.
Over the
next few years we will continue to promote the ³ÉÈË¿ìÊÖ digital services
both in TV and Radio – with the next stage of major activity planned
later this month.
Overall
we believe that the prospect of getting a fully digital Britain is now
brighter than ever. With the right cross industry co-operation and the
appropriate lead and framework from Government, millions more UK citizens
can go on to enjoy the full benefits that digital offers, in the relatively
near future. Now is the time for us all to get behind the long term
vision.
Meanwhile
in the short term, if our activity continues to have a big impact, alongside
that of all the others promoting digital, perhaps 2003 promises to be
the biggest and best yet for digital in the UK!
Thank you.
