01 Jan 1998

After a slow start, digital TV in Europe is gathering momentum, but development is patchy. By early 1998 the FT Advanced Television Markets newsletter predicts there will be between 1.5 and 1.7 million digital TV receiving subscribers in Europe, but perhaps surprisingly the bulk of them - over one million - will be in France.

While the UK waits for Rupert Murdoch's BSkyB and the digital terrestrial folk to work out when and what they plan to use to entice digital sign-ups, the French market has born two serious digital platforms - Canal Satellite Numerique and Television Par Satellite (TPS) - while a third player AB Sat, operated by French production giant AB Group, has a deal to collect subscriptions to its programme "bouquet" from both AB Sat decoding boxes and, thanks to a "simulcrypt" deal, from Canal Satellite boxes.

So why is France able to sign up so many digital subscribers so fast, even with rival platforms, while in Germany digital aspirants Bertelsmann, Kirch Gruppe and Deutsche Telekom are spending their time lobbying Brussels for a special dispensation to work together on a single platform, claiming it is the only way for a robust digital business to develop in Germany?

Blame history. Canal Satellite's owner Canal+ has been in the pay-TV game for more than 10 years. It's pay channel has brand recognition and counts 4.3 million subscribers. Add to that the fact that off-air competition in France is much less than in Germany, where the amount of "free TV" has spoiled consumers.

Praise competition. Over-the-air French broadcasters led by commercial giant TF1, M6, and French state channels France 2 and France 3, have invested significant resources and political capital into carving out a rival digital franchise to Canal+. Head of TF1 Patrick le Lay is, as an example, determined to keep digital transmission of France's broadcast channels exclusive to TPS.

The gamesmanship is intense and has generated a lot of press about digital TV and its attributes.

TPS and Canal Satellite are carving out quite distinct niches. Canal Satellite has been able to rack up twice the number of subs as TPS mostly due to its greater clout with Hollywood studios and high-profile sports.

Warner Brothers is set to take a 10 per cent stake in Canal Satellite, likely with guarantees attached to access to its movie output. Universal Studios launched its first thematic channel exclusively on Canal Satellite late in 1997, complimenting an exclusive deal for its movies. In sports Canal Satellite has the exclusive live rights to French first division soccer until 2002.

TPS also has some exclusive movies rights, namely from Paramount and MGM, and its broadcast parents also give it access to some high-profile sport, but even as they work on getting more rights, the executives at TPS are also putting heavy betting on something other than just more TV, seen from multiple angles, as is the case with the digital coverage of Formula One racing.

Interactive services from simple information like real-time weather updates, to more sophisticated virtual shopping malls and interactive advertising, are a big focus of TPS. The company says that its subscriber base of more than 300,000 digital subscribers already outnumbers the number of on-line homes in France.

Late last year TPS launched a virtual shopping mall sponsored by Lego where using the TV remote, shoppers can browse through the latest Lego toys, play some on-screen games and order the products directly from the screen. In its first efforts in interactive advertising, TF1 and M6 ran ads for the Renault Kangoo car. For TPS subscribers there was an on-screen button to access more information through a virtual magazine, including one possibility that allowed viewers to have their local car dealer call them with more information.

TPS earns a fee for use of its "platform", and it also believes it can sell the services it creates, like its "Meteo" weather service, onto other digital TV operators who would rather pay a fee than re-invent their own forecast service from scratch.

Not that Canal Satellite is not developing interactive services, but its home shopping Spectacle channel is less a virtual mall than a narrative entertainment news and cultural programming channel with the facility to order a CD Rom or tickets for a show directly via the remote control.

Not only does Canal+ approach interactive services from a TV culture, its Canal Satellite digital box is cheaper to produce and for robust interactive services will need to be upgraded. To this end Canal+ has been lobbying the Digital Video Broadcasting (DVB) group responsible for setting technology standards about setting up a new one that will be backward compatible to its current box even as it sets an "open" likely Java-based applications standard for developing new interactive services.

Interestingly, the focus on the box has also made Canal+ and TPS look beyond their own competition to another player eager to get into the digital services business, namely Microsoft. Using its souped up Web TV box, the software giant is set to change the rules of the digital TV game, not just in France but around the world.