British Box Boom Driving DTV Market

By: Tom Butts While the US slowly rolls out DTV services via high-priced HDTV sets and broadcast upgrades to digital, overseas the drive to digital is well underway with the advent of free digital set-top boxes.

Rupert Murdoch's UK-based BSkyB (London), which launched its SkyDigital satellite DTV service last October, fired the opening salvo in May with its offer to provide free digital set-top boxes to its subscribers. The proposal was followed soon after by ONdigital, (London) UK's digital terrestrial service, which offered to give away its digital set-top boxes, which had previously sold for around $310.

This past weekend, both companies made announcements alluding to the success of the offers—BSkyB said it was doubling its work force for installations and tech support, due to demand that had gone "through the roof." And a UK analyst predicted that ONdigital's subscribers would increase from its March level of 110,000 subscribers to more than 240,000. SkyDigital has about 900,000 subscribers and is expected to pass the one million mark by the end of the summer.

While BSkyB's offer is expected to cost the company more than $470 million, Murdoch obviously believes in the potential of DTV in the UK. His bullish take on the market is seconded by Pace Micro (West Yorkshire, UK), Europe's largest set-top manufacturer.

On Monday, Pace CEO Malcolm Miller predicted the worldwide market for digital set-top boxes would increase fivefold over the next five years. He estimated that, based on market forecasts, worldwide production of the boxes would exceed 50 million per year by 2004, up from 10 million in 1998.

Pace, which has increased production of its digital set-tops by 30% since last fall's DTV launch in the UK, has about 23% of the European market and approximately 9% of the world market for set-tops.