Freeview boss Ilse Howling:
It's time to take HDTV mainstream
Freeview doesn't own TV channels, doesn't decide which TV channels get space on its platform, doesn't make TV programmes and doesn't make set-top boxes. Yet since its launch in 2002, this digital terrestrial television (DTT) brand has become Britain's most popular digital TV platform.
Good reception: Ilse Howling now sees more than 18m homes tune in to Freeview to watch shows such as Top Gear, top, and live coverage of the Winter Olympics More than 18m homes now have Freeview on at least one TV set, with 10m using it on their main set (BSkyB's pay offering, by contrast, has just shy of 10m subscribers).
Next month, Freeview â€" which is owned in equal shares by the BBC, ITV, Channel 4, BSkyB and transmitter owner Arqiva â€" will officially launch its high definition (HD) service. The launch is carefully timed for just before the football World Cup this summer, and both the BBC and ITV will be showing matches in HD on Freeview.
BBC says Project Canvas could be delayed until 2011
Analogue TV switch-off for 7.2m "I think this is the first time that we will see HD go mass market, mainstream," says Ilse Howling, Freeview's managing director.
Freeview's HD set-top boxes are on sale, priced from about £130, but with no ongoing subscription costs. The BBC and ITV HD channels are already on air, with 60pc of the country to be able to receive them by the end of the year.
Howling's market research shows that 18pc of existing Freeview homes will be "likely to" switch to Freeview HD on their main set in the next six months. That figure drops only 1pc, to 17pc, for homes that already have BSkyB's HD offering. As Howling eyes more than 300,000 Sky HD subscribers as potential converts to Freeview, BSkyB may perceive a threat â€" an odd position, given BSkyB's shareholding in Freeview and its reliance on its own HD product to drive dish sales. But, says Howling, she didn't seek approval from BSkyB to take that position, and nor has BSkyB criticised her for it.
"From a personal perspective, I've learned an enormous amount from working with them," says Howling of her relationship with BSkyB as a shareholder, which she says is positive. "Sky+ [BSkyB's personal video recorder] was already around when Freeview+ [the similar product from Freeview] launched. Freeview's been able to learn a lot from how Sky approached technical standards, their suppliers and customer service."
Unlike BSkyB, with its clear pay-TV proposition, Freeview has an unusual business model. Its shareholders put money in, but receive no money out. Freeview doesn't charge TV or set-top box manufacturers for using its logo and piggybacking on its marketing. (Last year, Howling estimates, more than £2bn-worth of equipment was sold with Freeview capability.) The benefit for shareholders comes in viewers tuning in to their channels: the BBC averages four hours more viewing each week for each individual in Freeview homes, compared to Sky homes. For ITV, that figure is around three hours; for Channel 4, two hours.
BSkyB, says Howling, has a different viewpoint, and sees Freeview as a "nursery slope" for people coming into digital. "The benefit for Sky of having its channels on Freeview is that's bringing the Sky brand to a group of homes who might otherwise simply never have considered Sky," she says. But she acknowledges that the few Sky channels on Freeview do not include any of its premium outlets. "Would I love to see free Sky Sports on Freeview? Yes I would. Is that likely in the economics of pay television? Probably not," says Howling. "And for Freeview viewers, that isn't necessarily the top thing that they would want."
Another thing that Howling would love is BSkyB's marketing budget, which dwarfs her own. Nonetheless, Freeview's spend on promoting digital terrestrial television increased from £4m in 2008 to nearly £10m in 2009, and is understood to be heading for £20m in the current financial year. "I'm expecting that the amount we spend promoting HD could well be as much as Freeview's whole budget was in previous years," says Howling. ITV and Channel 4 have, she says, been making additional contributions above their shareholder obligations. About half the money is spent on "above the line" marketing such as TV and online advertising, with other spending priorities including point-of-sale marketing and PR. Howling also plans to introduce 3D channels to Freeview in the next few years.
However, she warns against overestimating the potential impact of Project Canvas, the BBC-led project that â€" if given regulatory approval â€" will link DTT boxes to an internet connection. It has been described as "Freeview meets the iPlayer", and the BBC projects that it will have a marketing budget of £48m in its first four years. Howling is sanguine, however, about any impact on Freeview's funding. "It's a question of looking at what makes sense if you're a shareholder, and looking at how television is consumed," she says. "Last year, 99pc of television in Britain was consumed through broadcast television, not through the internet. That's going to change quite slowly."
For Howling, the point of Freeview's marketing spend is to get one message across, using a new slogan: buy now, watch today, free forever. "Two million homes still don't have digital TV," says Howling, "and for some of those homes, explaining that they can get digital and they don't need to pay for it â€" they just buy the equipment â€" is still news. What we have is a really simple story, well told."