A report by the business advisory firm Deloitte identifies technology as being a key driver of change in the UK television industry. And the sector is adapting to the opportunities and challenges presented by these technologies with varying degrees of success. The report, ‘Here’s one I made earlier: perspectives on the UK television sector’ will be presented to all television executives attending this year’s Edinburgh International Television Festival (24-26 August). 

Of the seven issues identified as vital to the industry’s development in the coming year, four are concerned with its ability to adapt to new technologies: growing demand for Internet Protocol TV, high definition TV, the lukewarm response to mobile television and Internet television’s slow but steady progress.

Ed Shedd, Head of Media at Deloitte comments “Television is one the most ubiquitous media. TV sets are set to outnumber the population of the United Kingdom. It is one of the country’s largest businesses that generates billions of pounds in revenues. Having faced relentless change since the BBC’s first broadcast in 1936 our report today illustrates that if anything the pace of change is increasing. The industry has to adapt continually to rapidly advancing technologies. These and other factors are combining to redefine where we watch television, how it reaches us, who supplies it, which individuals and companies profit from it; indeed, what television is.”

Key points from the Deloitte report ‘Here’s one I made earlier: perspectives on the UK television sector’ follow:

Internet television’s progress is steady but slow
While UK broadcasters are likely to have a major influence on the take up of Internet television, through the quality of the content, supply is not limited to the big six broadcasters. 

Peer to Peer networks used by online video services and increasing demands on network capacity may be a barrier to uptake.

The report concludes ’once the Internet reaches the television set, rather than television reaching the PC, then Internet television’s days may be numbered.’

Not yet mobile television’s year?
Forecasts for mobile TV are at odds with the reality.  Although device makers, content creators, mobile network operators still demonstrate considerable faith in mobile TV, its success remains unproven. Industry estimates suggest there will be 100,000 customers paying for mobile TV in 2007 . Whereas forecasts by Screen Digest predict that mobile television will generate £3.2 billion in revenues from 140 million subscribers.

The report concludes that ‘mobile television needs to focus far less on being a pale imitation of the big box in the living room’ and instead should ‘try and establish a new genre of television that appeals despite a mobile phone’s physical confines.’

IPTV’s promise gets closer to realisation
Internet Protocol Television (IPTV) offers to fulfil the industry’s long standing aspiration to offer potentially unlimited viewing choice.

Demand for Internet Protocol Television (IPTV) services in the United Kingdom is still relatively low. At the time of Tiscali TV’s launch in March 2007, it had 40,000 customers . BT Vision had 20,000 customers at the end of June 2007 .

Both companies aim to increase their IPTV subscriber levels significantly. Their optimism would appear to be supported by success in Europe and the US. Free, a French IPTV provider, has in the region of 1.5 million customers, and almost two million are forecast by the end of 2008 .  France Télécom’s Orange has approaching 900,000 customers . In the United States, Fios, an IPTV service offered by network operator Verizon, had over 500,000 subscribers by the end of June .

The report questions how many viewers really want infinite choice: ‘for some, choice may be a chore’. And concludes that the success or otherwise of IPTV in the UK will start becoming apparent over the next year.

High definition gains traction
More than 21 years after Japan launched it first ever commercial high definition (HD) service, the leading UK HD broadcaster BSkyB announced 292,000 subscribers in July 2007.

Content and equipment are cited by the report as being the key factors behind HD take up. 

For the consumer the cost of entry to HD is dropping, thanks largely to the strong competition between flat-panel television vendors. Prices dropped by 30% in 2006 . However multiple standards for broadcast, recording and connections may confuse some customers. And when purchasing a DVD player the need to choose between the two key standards, Blu Ray and HD DVD, may act as a further disincentive to consumers.

HD content is high profile, but still a small proportion of total production and transmission. HDTV is likely to grow and at some point in the future should become the default for production and broadcast.

The challenges of comparing new media and traditional media
The challenges involved in comparing new media and traditional media are highlighted in the report and it suggests the industry should pay more attention to the facts than the hype: ‘…while new media should be regarded by television as both opportunities and threats, the industry should be diligent in identifying the real threats, before forming a strategic response. Terms of reference, in analysing television and new media, differ frequently.’

For example YouTube, with 100 million daily downloads, is often portrayed as a threat to traditional television. The report points out that ‘a television viewer is not comparable to a unique viewer on the internet, and a television programme is quite different to a video clip.’ When comparing total number of hours watched ‘traditional broadcast television in the United Kingdom far outstrips that of YouTube globally, by a ratio of 24-1 .’

Read our executive summary and download the report, ‘Here’s one I made earlier: perspectives on the UK television sector’.

Ends

For further information, a copy of the report or to arrange an interview please contact Jason Leavey at Deloitte 020 7303 7030 or 07958 368 008

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.