Kate Bulkley, Media Analyst.

Buyer Beware

By Kate Bulkley

The Guardian

Wednesday October 19, 2005

With only seven Christmases before switchover, shoppers need to make sure they buy the right TV set to avoid digital disappointment

TV industry's long and winding road to switchover

Now that the government has set the timetable for digital switchover, UK high streets are gearing up for a happy Christmas where selling TV sets and big screens that are digital-friendly is a priority. That, at least, is the Christmas message that Digital UK, the group given the task of leading the government's plan to make the UK an all-digital TV country by 2012, would like retailers to deliver.

However, consumers could face some festive disappointments because the items they buy may be obsolete by the time the digital switchover happens. "There will certainly be a lot of digitally enabled kit available this Christmas," says Ford Ennals, the chief executive of Digital UK. "But I don't think it's a one-shot deal. There are six more Christmases to go after this one before switchover."

That may be true for the last areas to lose their analogue signals but under the switch-off timetable announced by the government last month, some areas will begin the turning off process in 2008, less than three years away. And how unhappy will be those consumers who buy new flat-panel TVs this Christmas be when they find out in a few years' time that their new TV won't work with digital-only signals?

"Flat-panel screens are being sold with analogue tuners," says Wayne Potter of GFK Marketing Services, which tracks retail sales of consumer electronics. "The sale of digital TV sets is growing but they are still outpaced by the sale of analogue TVs, so the consumer is dependent on buying a set-top box, like Freeview or Sky, to get digital signals on his TV."

The integrated digital TV, where the digital tuner is embedded in the TV itself, is still a niche product, says Potter. "It's not as big a market as it should be given that digital switchover begins in three years. I suppose this can be seen as either a big problem for the industry or a big opportunity, but the point is the consumer. There are a lot of people that don't have any idea what is going on here."

Part of the problem is price. Digital equipment typically costs more, so buying an analogue set or screen and attaching a set-top box is cheaper than buying a fully integrated digital TV. But unless it's a Freeview box there is a monthly subscription attached, which adds to the cost of receiving digital. The good news is that prices for integrated equipment are going in the right direction for consumers, ie down.

The other potential confusion for consumers this Christmas is the growing number of high-definition TV sets and screens on sale. Although no UK HD channels have yet launched, they are coming early next year when Sky will start to offer a package of HD channels, including sports, movies and documentaries. Sky isn't saying much about its marketing strategy for HD now, but the company is "gearing up" its HD message, according to a Sky spokesman, who says: "HD is going to be one of the big things next year." Meanwhile, DVDs look better when they are played on an HD screen.

But a possible point of confusion for the consumer is that an HD-ready screen is not necessarily a digital-ready screen; consumers may still need a set-top box to get digital signals. Comet, one of the UK's biggest retailers of electrical goods with some 250 stores, admits that only half of the TV-related kit (TVs, screens and recording equipment) on its shelves is digital. "We can only sell what the manufacturers make," says Simon Fox, the managing director of Comet. "But I believe that most of the confusion for consumers is in the recording equipment area."

Thirty-five million VCRs in the UK have analogue tuners, according to the Digital Television Group. For retailers like Comet, digital is not going to be the big selling point this Christmas because for most people digital switchoff is still more than four or more years away.

"The time horizon for HD is shorter than for integrated digital TVs because of Sky's HD plans for the big events like the World Cup," says Comet's Fox. "What is really exciting about this Christmas is that for the first time we have sexy, slim TVs for an affordable price. That's what drives consumer demand. Digital is there in the background but people aren't rushing out to buy a new set because their area is going digital in 2010."

Here is the dilemma in a nutshell: at Comet a 42-inch Samsung plasma widescreen HD-ready TV costs 1,699 but doesn't include a digital TV tuner. But the stores also are stocking a Philips 37-inch, HD-ready LCD TV that does include an integrated Freeview tuner for 1,264.95. But that TV won't be able to receive Sky's planned HD package without a Sky HD set-top box.

Fox admits it is up to retailers to help counter consumer confusion about what they should buy because the "backlash would be considerable" if consumers buy something that down the road they realise won't work in a digital-only environment. To that end, Comet has trained all 8,000 staff through a new e-learning technology about digital switchover. "We feel fully ready," says Fox.

Like other major retailers, Comet has adopted the Digital Tick stickers, a programme begun by the government to alert consumers to equipment that goods are digital-ready. If it's digital, it should have a sticker on it saying so. But although all the major UK retailers have made "an absolute commitment" to train and inform their staff about the Digital Tick in the run-up to Christmas, says Ennals, he also admits that government support, especially for independent retailers, has been less robust.

"We took over the Digital Tick programme the first week of October and my background is as a marketer," says Ennals. "We intend to improve the communication and the visibility." That includes increasing the value of the programme to retailers so that stores will be better supported with leaflets and other marketing materials. "We've got a whole replenishment programme ready and we are going to start doing this properly," says Ennals. The task at the retail and consumer education level is vitally important if the government's timetable is to be met.

More than half of UK homes already have at least one digital TV (typically through a Sky, digital cable or Freeview set-top box connected to their TVs) but the rest must be convinced. And then there are the homes (and this includes the vast majority of homes) that have more than one TV set.

"There's a lot of technical issues as well as marketing work to be done," says Richard Lindsay-Davies, director of public affairs at the Digital TV Group, which represents broadcasters, manufacturers and electrical retailers interested in digital switch-over. "There are a lot of legacy issues as well like VCRs and portable TVs. Some of these things have been brushed under the carpet and it's time for a reality check." In Lindsay-Davies' opinion, Freeview has to "step up to the mark" and be much more proactive in its marketing message.

The Freeview consortium got a push in the right direction last week when it added both ITV and Channel 4 as shareholders to its existing consortium, which already includes the BBC, BSkyB and Crown Castle, the transmission company. The same year the Olympics is scheduled to be held in Britain is also the year that the government proposes turning off the last of the old analogue TV transmissions; London itself is among the last areas to be converted. So the pressure is on to meet the date.

Ennals looks on the positive side, saying that "Digital 2012" is a great rallying call to help convince consumers they should take up digital sooner rather than later. He even plans to use Olympic athletes in his marketing and education plans, sending out athletes to local areas to talk about the importance of watching the games on a digital TV set.

This strategy will please the culture secretary, Tessa Jowell. When she announced the switchover timetable last month, she made it clear that the digital timetable must be met. "I did not slog for two years to bring the Olympic games here just to see Londoners reduced to huddling round the wireless to find out who won the 100 metres."

 

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