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Telecommunications equipment industry

Digital Television War Heats Up as On Digital Announces Huge Subsidy

Strategic Insights

— 1 min read

The battle for digital television subscribers just got fiercer, as On Digital, owned by ITV companies Carlton Communications and Granada Group, announced it would give away free digital set-top boxes, matching an offer by satellite company British Sky Broadcasting. On Digital's move is a significant investment of £200m in the current and next financial year, aiming to bring digital TV to every household. Analysts see this as a bold move to counter BSkyB's competitive threat and win over subscribers.

Key Takeaways:

  • On Digital will provide free digital set-top boxes, worth £200, to its subscribers, matching an offer by British Sky Broadcasting, which launched 140 digital channels last year.
  • Existing digital sets are being subsidised, with a new digital TV set, manufactured by Bush, going on sale at £299, less than the average analogue TV price.
  • On Digital is increasing its monthly subscription fee by £2 for certain packages, while existing subscribers who already bought a £200 set-top box will have their charges frozen until January 1, 2002.
  • The group is also eliminating its £20 connection charge, matching a move by BSkyB.
  • Analysts predict On Digital will have "in excess of 2m" customers within three years, with the group spending £150 to acquire each subscriber who opts for a set-top box and £100 for those who buy a subsidised TV set.
  • The promotions from On Digital and BSkyB mark the beginning of the end of analogue television, with analysts expecting a rush for free set-top boxes this bank holiday weekend.

Statistics:

  • On Digital is investing £200m in the current and next financial year to promote digital TV.
  • The group aims to bring digital TV to every household, with £150 spent on each subscriber opting for a set-top box and £100 for those buying a subsidised TV set.
  • On Digital's rivals, BSkyB, launched 140 digital channels last year.
  • On Digital's monthly subscription fee increase is £2 for certain packages.

Sources:

  • Financial Times Limited, 1999, "Digital Television War Heats Up as On Digital Announces Huge Subsidy".

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