Varied packaging contributes to diginet take-up rates ranging from 21% to 40%

The major broadcast distributors driving the rollout of digital TV are generally giving the thumbs up to take-up rates achieved to date for the new digital specialty TV networks that launched last fall. But gauging the success or failure of the launch is proving challenging due to the many variables and the short timeframe since people have actually had to shell out for the channels. A month after the end of free previews by major distributors, 21 per cent of Shaw Cablesystems’ digital subscribers and 25 per cent of Star Choice Communications Inc.’s customers have purchased some of the new digital channels. That compares to 40 per cent of Bell ExpressVu LP’s customers opting for some of the new channels, and 38 per cent of Rogers Cable Inc.’s digital subscribers placing orders. The figures were provided by the respective companies, which combined serve about 85 per cent of all digital TV subscribers in Canada, according to Decima Publishing research. Michael Allen, VP of programming at Rogers Cable, calls the initial reaction to the new services "promising". David McLennan, president and COO of Bell ExpressVu, says he’s "not disappointed at all", but that it is too early for a full analysis. Peter Bissonnette, president of Shaw Communications Inc., remains more pessimistic, predicting that some channels are bound to fail. "We came out to be the strongest on the third tier (of analog services launched in 1997)," Bissonnette notes. "We’re in the 65 per cent penetration (level). …(But with the diginets), the longer the preview is off, and someone hasn’t ordered, it certainly will take a greater marketing effort to get them to see the channels. (At the moment), there are clearly favourites and clearly some that just won’t make it, in our view." It’s not surprising that the early take-up rates for the diginets are lower than rates initially achieved by the third analog cable tier, for example, since penetration levels have fallen gradually with each successive launch of a batch of specialty channels. But what hits the channels hard this time around is that there is more than three times the number of channels vying for a presence in a digital universe that’s much smaller than the analog world. As well, the packaging of the channels is much more varied. When the third tier of analog services was rolled out, the packages were similar. Cable customers were offered one package of between 10 and 16 channels, depending on the cableco (CCR, Sept. 24/97). This time around, cable customers have multiple choices: all-inclusive channel bundles, à la carte, pick-and-pay (i.e. choosing five or ten channel packs), and theme packages. Bissonnette says 50 per cent of Shaw customers who have placed orders for the diginets have bought a package of five channels, 10 per cent a package of 10 channels, and about 20 per cent an all-inclusive package. The remainder have selected à la carte or a pre-set package of 12 channels. Allen notes that half of Rogers’ digital customers have opted for an all-inclusive package while most of the rest have chosen packages of 40 to 45 channels. To date, customers have preferred to create their own packages rather than go with existing ones, he adds. Allen also points out that 28,000 customers have signed up for new premium multicultural channels. Neither Shaw nor Bell ExpressVu opted to carry these Category 2s. McLennan says the majority of Bell ExpressVu’s take-up has been through packages, reflecting "how our customers tend to buy the programming". Some of the satellite TV’s thematic packages, such as More Sports or More Movies, are new to its lineup and contain only diginets. But Bell ExpressVu added some of the new diginets to existing packages. For example, it added three new channels to its Lifestyle package. "The most popular packages continue to be the existing packages that we had, just because they have been around and are more established. Of the entirely new packages that were created to launch the new channels, the top ones would be movies, music, and kids," McLennan tells CCR. But Bissonnette theorizes that the take-up rate on Star Choice and Shaw is lower than that on Bell ExpressVu because for the most part they did not put the new channels into existing packages.He notes that Shaw did not put any of the diginets into existing packages, but Star Choice added Showcase Action, Showcase Diva, and SCREAM to its premium movie package, which he believes accounts for the three per cent higher take-up rate on Star Choice over Shaw. "We were trying to attribute differences between ourselves and Bell in terms of buying because our customers are not unique," Bissonnette tells CCR. "Bell has put a lot of the services into existing packages. So that’s why they would have much higher (take-up rates). Like (some of the new) sports services, for instance, went into their thematic sports package, so they had that built-in penetration of those packages already." McLennan notes, however, that while some diginets were added to existing packages, customers have the option of retaining the exact same packages they had before the new channels were launched. He adds that 40 per cent of Bell ExpressVu’s customers have chosen to go with the new packaging in some form or another. McLennan attributes Bell ExpressVu’s higher take-up rate to advertising the packages and pricing right from the get-go. "Prior to the launch of the channels, we announced our pricing and packaging last August," he points out. "I think that was really important because people knew how they were going to buy the product and how much it was going to cost them. No one else really did that. I know Rogers, other cable companies, and Star Choice announced their packaging in late November. I think we were able to articulate more clearly what the programming was, how it was going to be packaged, and how much it was going to cost." Notwithstanding Bell ExpressVu’s relative success in selling the diginets, McLennan says marketing the channels remains a challenge. "There’s no question it’s a tough market. There are what 2.8 million digital customers on both cable and satellite? But I do think it’s too early to tell (how the diginets will do), given that it’s only a month into the actual selling of the product." Bissonnette points out that in terms of real numbers of customers purchasing the diginets, Shaw would be almost equal to Rogers because while Shaw’s take-up rate is lower, it has deployed more digital boxes.

Varied packaging contributes to diginet take-up rates ranging from 21% to 40%

Broadcast | February 15, 2002

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