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But still behind Murdoch's BSkyB in box race
By Simon Bond
The UK pay-TV company ONdigital has reported that its subscriber numbers more than doubled in the last six months of 1999, with its pre-paid "plug-in and play" television receiver boxes leading the way into more British homes.
ONdigital, equally owned by TV companies Carlton Communications and Granada, has increased its customer base to 552,000 subscribers from 247,000 at the end of June last year.
The company's chief executive, Stuart Prebble, notched up a few points against his pay-TV rivals, telling a London news conference: "Just one year since launch, ONdigital already has half as many pay television subscribers as the biggest of the cable operators has after 10 years."
However, even with its newfound gusto, ONdigital still has a way to go to before it catches up with the UK pay-TV leader--Rupert Murdoch's BSkyB had already signed up 1.8 million customers to its digital satellite service by mid-October.
Nevertheless the company is definitely on the rebound after being dogged by a run of bad luck for much of 1999. ONdigital lost its first chief executive and much of its board of directors in an acrimonious management bustup at the start of last year.
This was followed by a run of lackluster results. Much of the turnaround is being attributed to the company's pre-paid digital receivers strategy. ONdigital started to sell the receiver boxes at the beginning of November and they already accounted for around half its December retail sales.
Ondigital says that it benefits from reduced customer management costs and bad debt, and the pre-payment also boosts the company's cash flow.
Customers seem to be turned-on by the instant gratification of buying pay-TV on impulse and being able to plug into the service immediately after purchase.
The UK's major High Street retailers are now all stocking the ONdigital line, including Woolworth's and Great Universal Stores' Argos chain.
The pre-paid box offer was also helped along by some more traditional techniques. The UK's holy alliance between soccer and pay-TV subscriptions dictated that the launch of new boxes coincided with ONdigital's debut of Sky Sports 2, with 68,000 subscribers upgrading to the channel ahead of a crucial Euro 2000 soccer play-off between England and Scotland.
ONdigital is now looking to expand its service and has formed a pay-per-view joint venture with SDN, a consortium made up of British rival United News and Media, U.S. cable group NTL Corp. and the Welsh TV station S4C.
It also plans to launch its 'Onmail' e-mail service later this year, which will allow customers to send and receive messages via their television sets while watching programs.
At launch, ONdigital said that it would aim for 2 million subscribers during 2002, and company claims that it is still on target to reach this.
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Simon Bond covers European media for Media Life, writing from outside of London.