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Digital Television The viewer of the future

The viewer of the future With a rapidly changing TV market, much emphasis in terms of analysis has focused on the technology facilitating change and on the economics of broadcasting in a more fragmented TV environment. What has been neglected by many, largely because it is difficult to establish, is the impact an explosion of TV choice and new services will have on consumers. Questions surrounding the ammount of time and money consumers will invest in this new TV world, form the basis for any analysis on the future direction of TV in the UK; this report focuses on how the TV viewer of the future will address these issues.
The amount of time that consumers spend watching TV - in the conventional sense - is likely to reduce over the next five years. People watch 5% less television now than they did in 1992. Average weekly viewing hours decreased in 1993 and 1994, but have remained relatively static ever since However, changing work patterns and family structures, combined with an increase in leisure options, could further reduce the amount of time available for TV viewing.

The TV viewer of the future will pay significantly more for 'destination' content - that is content that they would really choose to watch. This will include payment for the first showings of high-profile programming like the X-Files, ER, key supporting events and films recently released for TV. This has already begun to happen but as subscription revenue increases the purchasing power of multichannel broadcasters will also increase, making it harder for terrestrial broadcasters to purchase rights for popular programming.

The explosion in TV choice, due to the launch of digital TV, will consign mass audiences of over 10 million to history, with a few high-profile exceptions. These will include the eight listed sports programmes chosen by parliament to be broadcast on terrestrial TV as representing the national interest. Mass audiences will also revolve around special high-profile events, including wars, royal weddings, funerals and natural disasters. For some lucky programmers, mass audiences will also be captured by exceptional programming which captures the hearts of the UK TV viewing public. This programming will be the subject of high-profile and expensive bidding wars, certainly at terrestrial TV level.

The motives of TV broadcasters vary, depending on whether they are seeking terrestrial or multichannel audiences in order to attract lucrative advertising revenue. This will in turn fund additional high-profile programming and so on. For cable and satellite broadcasts, subscription revenue is significantly more than that of advertising. If fact, in the UK, subscription and pay-per-view (PPP) revenue are forecast to have outstripped TV advertising revenue by the year 2002. A final area for consideration is that of active viewing, i.e. viewers actively interacting with the TV for the proposed services which the digital TV will introduce. Will consumers be prepared to interact with a device which traditionally has been used as a passive entertainment-orientated box, consumed at a distance and often in the presence of others? TV usage to date has involved very little interactivity. Indeed, whether time spent in front of the TV will increase, due to the explosion in services which digital households will experience, is a debatable point. Should the services offered have a resonance and relevance for the UK population, be that through time-saving devices like home shopping and/or virtual reality games, then one can forecast an increase in time spent in front of the TV. Some of this time spent on interactive services will be taken from 'default or unplanned viewing' time.

The opportunities for developing new revenues streams from the interactive possibilities offered by digital TV appear relatively limited in the short term. However, as this report highlights, major opportunities will exist for those capable of raising to the challenge of developing easy-to-use, entertaining or time-saving devices. When portraying the TV viewer of the future, it is important to understand the current life style and the relevance of TV to viewers in the present. TV has a pre-eminent place in UK households with over 90% of the population watching some television during any week. There are 42 million TV sets in the UK (over two per household on average) and over 21 million video recorders. With the average viewer watching 25 hours of television per week, TV viewing is by far the most popular leisure activity in the UK. The evolution of media in the 20th century developed at a slow pace until the 1980s. In the 1920s, radio was transmitted for the first time, followed by TV in the 1930s. The launch of Channel 4 in 1982 took the total number of TV channels in the UK to four heavily regulated options for TV viewers. The 1980s, however, heralded a change in how TV was viewed in the UK. The mass market penetration of remote controls and VCRs started a revolution in how consumers watched TV. Consumers suddenly had control over when and how they viewed TV; they adapted with aplomb to controlling TV. In 1990, the nature of UK TV programming choice changed dramatically with the merging of two embryonic satellite TV stations, Sky and BBS, to farm one of the most powerful TV powers in the UK, BSkyB. Between 1991 and 1997, the number of TV channels broadcasting in the UK rose from 14 to 64. Of course, not all of these channels are broadcast to all multichannel subscribers. However, overall, the UK TV viewer has been bombarded with increased choice, but this choice has been available at a cost. The number of UK households which have chosen to subscribe to multichannel TV is 25%. The level of multichannel TV subscriptions will continue to rise as BSkyB continues to invest in attracting key programme sectors away from terrestrial TV. Sports enthusiasts in particular have been faced with the choice of paying for subscription TV or doing without. So, although we are living in an age of unprecedented technological advancement and corresponding media choice, the cost of entry to the new world is considerable. In addition to the technological advancements in the world of TV, the last 1980s has witnessed an explosion in other media and communication devices from the mass introduction of the Internet and e-mail, to mobile phones, and now to a new age of TV - that of digital TV. The range of devices which will have the capability to access TV and Internet programming is multiplying rapidly. Radio is developing its digital capability with digital audio broadcasting which, among many more specific content-related pages from the Internet via a screen attached to the radio. In addition, there will be an explosion in single application devices or 'toasters', where one will be able to access the home shopping/home banking element of the digital TV offer. Games consoles etc. are also offering increasingly sophisticated technology.
In addition, the physical TV set is changing. A question often asked about the future TV viewer is whether they will access TV through the conventional black box in the living room, or will we see an explosion in alternative devices which will provide access to TV contents as we currently know it. We will certainly see an explosion in devices used for accessing TV. In fact, PCs are already being fitted with TV receivers providing PC users with another convenient way to view TV content.
Choice in many areas has become a burden for consumers. In fact, never before have consumers had so much competition for time and attention. In all areas of their daily lives, consumers are bombarded with choice and options - an exhilarating experience for some. For many more, however, it is a paralysing reality, where the easiest option for many is to do nothing.
As the level of programming choice increases, consumers will depend on trusted guides to help them navigate through unknown territory. Electronic Programme Guides (EPGs) will be very important mechanisms for ensuring consumer acceptance of new TV technologies.
The nature of the relationship that broadcasters have with viewers will also change. Broadcasters have enjoyed free-to-air broadcasts unmediated by third parties. Through EPGs, unmediated access to audiences could become a thing of the past.
Regulatory issues will also change in this new environment. To date, TV supply in the UK has been a scarce commodity and consequently heavily regulated. As TV supply increases with the advent of digital terrestrial, digital satellite and digital cable television, the nature of regulatory involvement will change, from sharing out scarce resources to ensuring that no one company abuses its dominant position in terms of distribution, programming or audience access. Another issue which will increasingly trouble regulators will be that of technical standards for set-top-boxes and digital TVs. In fact, as technologies intertwine in the digital landscape, the nature and remit of regulatory bodies will alter accordingly.
One of the key attributes of digital TV will be the functionality that it will provide to viewers. Consumers will be able to buy, bank, play games and seek out all manner of information through the device they are using to access TV. As Frank O'Mahony observes in his article E-Commerce is Net best thing for Valley in the Irish Times, (2 January 1998), 'Manufacturers don't want customers to be couch potatoes anymore, but to be active participants in programming, surfing to on-TV Websites to find out fore about the story being discussed and going online to purchase what is being shown on the programmes.' To date, the TV has been used to entertain, inform and educate. The new TV environment will provide the additional options of transaction and communication. One of the unanswered and un-solvable dilemmas is whether consumers actually want to react with their TVs, and if so, when and what kind of services they will migrate