Back in July we estimated that the take up of Freesat in the UK, the free to air advertising supported satellite TV service, might go as high as 100,000 a quarter once figures are finally announced on uptake. We estimated at the time that perhaps 60,000 Freesat devices had been installed.
Although that is really a small number in the scheme of things (pay TV services reach around 400 million homes globally and TV around 1.3 billion homes) it is roughly in line with the early take up rate experienced by Freeview, the first national DVB-T service which now goes out to over 10 million UK homes, with over 30 million devices sold in the UK, which has led to over 60 million homes so far adopting DVB-T worldwide, and the prospect of that continuing to rise logarithmically.
This week Freesat revealed its take up numbers for the first time saying they have reached 100,000 in just 5 months since launch, which suggests that our initial estimates were slightly high and that the take up is running a few months behind our estimate. That still means that the quarterly rate is already 60,000 or more per quarter, and that next quarter it could accelerate to 100,000 quite easily.
Freesat leases transponder space on Eutelsat and later is expected to use SES Astra, which are some of the same satellites which rival pay TV operator BSkyB uses. Given that Sky is actually a member of Freesat, it also competes with the service while supporting it. The reason for that is because most homes have a satellite dish through Sky, and if the company is not careful those almost 9 million homes may trade down from a monthly fee of some $65 upwards to paying zero, and using the existing installed equipment.
If Freesat acquires customers at the rate of 60,000 to 80,000 a quarter when no-one has heard of it, at a time when there are only one or two devices for it, and when there are just a handful of channels, with only two currently transmitted in HD (but with lots more expected), then what will happen when everyone has a neighbor with Freesat and it has 200 TV channels and when every consumer electronics manufacturer supports it?
Someone from the Pay TV community recently said to me not to worry about Freesat because it is being run by idiots. My riposte then (and now) is that if idiots can do this well, rivals are in real trouble if Freesat recruits someone smart. And all that’s without spending money advertising the service. Freesat just issued a contract at the beginning of September, to spend £5 million ($8.8 million) on its first advertising campaign, using creative agency the Farm.
Throughout Freesat’s life there have already been acute device shortages with set tops from the Alba group ( with brand names Bush, Goodmans and Grundig) which had picture quality problems, and only one Panasonic Plasma TV set on the market until this week when a Humax DVR joined the line up and got rave reviews.
New devices are expected by the end of the year from Sony, Samsung and Toshiba and a second wave of products are expected from Humax, Alba and Panasonic by early next year.
These are the typical problems that you get when a group of channel owners take an initiative, and a group of suppliers and retailers are wooed and the marketing has no single cogent story. But it was the same in 2002 when Freeview was launched, and that has stimulated a huge wave of DVB-T activity, not all of it free to air, across all of Europe and beyond. Much of which rests on the original model stimulated by the BBC, with its partners BSkyB and network operator National Grid Wireless, which ran the first DVB-T multiplexes after ITV’s OnDigital had gone bankrupt. That initial success gave the confidence for France, Spain, Italy and others to make the leap into DVB-T digital terrestrial broadcast technology, which has now spread to almost 40 countries world wide.
In a similar way France already has a Free to air satellite plan called TNT Sat coming out of the same group which runs the Freeview styled French TNT DTT service, which has 8 million homes using it. Italy is now planning a similar service, and Spain plans to deliver its DTT from a satellite. Recently new HD channel were added to the French service. As long as these services stay in step, they will create large common consumer electronics markets across Europe, initially and after that the world. That will bring down device prices, and take out the only barrier to millions of homes adopting this ahead of existing pay TV services.
Last quarter BSkyB’s pay TV service grew subscriber base by just 43,000 while UK cable operator Virgin Media added 37,000 net new subscribers, which means that Freesat is already growing faster than any pay TV service in the country. Repeat that across Europe, South East Asia, India, China, Africa and Latin America ‘ all markets which might go down this route, and you have a virtual revolution in TV economics globally. Repeat is in the US, and you will have a major market upheaval.
Which is perhaps why researcher Informa recently predicted that by 2013 there would be 15 million Freesat homes worldwide. In fact it could be much, much more than that, perhaps ten times as many.