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Last Updated: Wednesday, 2 February 2005, 19:29 GMT
Christmas strides for digital TV

By Torin Douglas
BBC Media correspondent

Watching a big TV
Millions watched digital channels over Christmas
So it really was a digital TV Christmas - in the shops and in people's homes.

BSkyB's latest results confirm earlier signals - including the Christmas viewing figures - that digital television is on a roll, whether people receive it by satellite, cable, the terrestrial Freeview system or broadband.

Sky added 192,000 satellite subscribers in the three months to December 2004 - its best performance for two years, reversing a slowdown in pay TV that had got the City worried.

Sky has long been the pioneer in digital television and now has over 7.6 million satellite customers.

'Record Christmas'

But in the past two years, its growth has been put in the shade by that of Freeview, the BBC-backed system which rose from the ashes of ITV Digital, the failed pay-TV service.

Freeview had a record Christmas, according to BBC estimates, selling 1.5 million boxes in the three months to December 25th.

That puts it in well over 4 million homes, according to the Broadcasters' Audience Research Board (BARB), which compiles the ratings. The BBC believes it is in over 5 million.

Many viewers who have rejected Sky's sport and movie channels have proved willing to buy a box that gives them extra TV and radio channels with no subscription.

We also think Freeview is giving people a taste of multichannel TV, that it's a catalyst for pay-TV
James Murdoch

There have been forecasts that by the end of this year Freeview could be neck-and-neck with Sky, in over 8 million homes each.

Sky's results have reassured the City that pay-TV is not running out of steam, as analysts had feared.

Its profits are up by 25% and thousands of people are paying more to install Sky in more than one room.

Thousands more are buying the Sky+ box, which lets them record programmes more easily and even pause and rewind live programming.

But the increase in subscribers has come at a cost.

Sky launched a huge pre-Christmas marketing campaign in October, on the theme 'Sky - what do you want to watch?'

According to James Murdoch, Sky's chief executive, the campaign has hardly begun.

Digital TV offers many more channels than analogue

In the coming year, the company will be spending almost 80m on advertising and marketing - a rise of almost 50%, as it tries to persuade people there's more to pay-TV than sport and movies.

Murdoch insisted he was not alarmed by the rapid rise of Freeview, in which BSkyB is also an investor.

In a conference call with journalists, he said: "Clearly its very strong digital receiver sales in the Christmas quarter did not prevent us having our strongest quarter for two years."

"A customer who goes out and buys a Freeview box today is less likely to decide they want Sky today as well but we're confident that they will over time," Murdoch said.


"We also think Freeview is giving people a taste of multichannel TV, that it's a catalyst for pay-TV."

It is also changing viewing habits. In 2004, for the first time, viewers spent more time watching digital, cable and satellite channels than either of the two most popular channels, BBC One and ITV1.

The switch was even more marked during Christmas week.

At one time, on Christmas Day, up to 30 million of us would gather round the same programme, whether Morecambe & Wise or Eastenders.

At Christmas 2004, the top audience was just 12 million, as viewers scattered to watch their DVDs or one of hundreds of digital channels.

In Christmas week, the digital channels took 29% of all viewing.

All the forecasts suggest that by Christmas 2005 many more of us will have gone digital.

Subscriber growth boost for BSkyB
02 Feb 05 |  Business
BSkyB subscribers beat forecasts
12 Nov 04 |  Business
BSkyB launches rival to Freeview
21 Jun 04 |  Business

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