Digital television is experiencing various teething problems around the world: In the U.S., it is making rapid progress, but in Europe and Asia, viewers are far from joining inBy Wolfgang KoschnickThere is virtually no doubt: The future belongs to digital television. But the future is a long time coming. In Europe, progress is so slow that it could give you the creeps. In the USA, in Asia and even in some parts of Africa, things are moving a little more quickly, but almost everywhere there are great difficulties in recruiting larger audiences for the new TV offering.
The Americans can already look back on six years of experience with digital television. In 1994, the Direct Broadcast Satellite System (DBS) got off to a very tentative start. Today, some 14 million Americans are supplied by satellite with the programming offered by the Digital Satellite System (DSS).
250000 more DTV consumers per month in the USA
The current growth rates are tremendous. Every month, another quarter of a million Americans opt for digitally transmitted satellite TV. In the U.S., satellite reception is now de facto synonymous with digital television: Digital television enters homes virtually exclusively via satellite.
In the course of the last few years, there has been a significant shakeout among the five providers, some of which were large and some small, all of which were in fierce competition with each other. They have largely bought each other out. And now there are practically only two competitors left on the market.
The leader was and is DirecTV, based in El Segundo, California. It delivers a basic offering and a range of pay-per-view channels: more than 500 channels in all, from which subscribers are spoiled for choice. The most attractive elements include feature films, sports, music and news. Exclusive program packages with popular sporting events and over fifty channels of pay-per-view movies in particular have catapulted the company to the top in its first few years.
DirecTV is a subsidiary of Hughes Electronics Corporation, which is also involved in the U.S. space program and builds satellites itself. The company has long since transformed itself into a globally operating TV broadcaster. Its main focus is on Latin America and Asia. Through a majority stake in Galaxy Latin America, DirecTV controls the Latin American market with programming in eleven countries (Brazil, Mexico, Venezuela, Colombia, Chile, Ecuador, Guatemala and others).
In the U.S., DirecTV is the market leader with over nine million subscribers and a market share of 65 percent. The pioneering years of digital satellite television in the U.S. were marked by fierce competition between DirecTV and PrimeStar. For a while, the two companies were almost tied in terms of subscribers. But then DirecTV surged ahead of its rival. Finally, in April 1999, it swallowed PrimeStar with its then 2.3 million subscribers. In those days, the entire offering was seamlessly transferred to DirecTV.
Number two for many years, it emerged as a joint venture of several cable companies: Tele-Communications Inc. (TCI), Time Warner, Continental Cablevision, Comcast and Cox joined with General Electronics Americom to form PrimeStar Partners, based in Bala Cynwyd, Pennsylvania. At its peak, PrimeStar broadcast over 500 channels.
While DirecTV subscribers must purchase the dish antenna and receiver, PrimeStar operated on a rental basis. Equipment rental and subscription costs were added up to a monthly amount, which started at one dollar per day for the smallest program combination. Therein lay the crucial difference: DirecTV competed from the outset as a high-power DBS system, PrimeStar as a medium-power DBS. For DirecTV, you can get by with fairly small satellite dishes. Those for PrimeStar are a bit bigger. In the pioneering phase, when the reception equipment for DirecTV still cost a good $600, PrimeStar profited from this calculation. As the price of the equipment fell, its attractiveness diminished considerably.
The competition has shrunk, but is not sleeping
Based in Littleton, Colorado, Dish Network is part of EchoStar Communications Corporation and now also offers more than 500 channels. After years of crawling, Dish Network has brought it to more than three million subscribers in recent years. It is currently the fastest growing provider of digital satellite television. Today, it has 4.76 million program subscribers. DirecTV's and EchoStar's program offerings differ only marginally from one another, and prices are now also at roughly the same level.
Meaningless today is AlphaStar in Stamford, Connecticut, a subsidiary of Canadian Tee-Comm Electronics in Milton, Ontario, and on the market since July 1996. It offers a choice of 110 channels and still has about 10000 subscribers. AlphaStar uses a satellite owned by the telephone company AT&T and now plays a role virtually only in Canada.
More successful than VCRs and CD players
The programs chosen by most digital TV users are sports broadcasts. Advantage: Even games that are only shown regionally by the normal broadcasting networks can be seen throughout the country. However, this is quite expensive. On average, each DSS customer pays $75 a month to choose from around 500 different offerings.
In the USA, digital television has caught on in no time at all. Just 13 months after its launch in October 1994, DirecTV registered its millionth paying subscriber. Neither VCRs nor CD players have ever gained a foothold in a country so quickly. Today, digital television is available in about one in eight American households.
The acceptance of digital television in the U.S. has been facilitated by the fact that Americans are used to being asked to pay for an expanded television service. Cable television is a costly affair in America, and no American says a word about it anymore. Either you have it and pay for it, or you don't.
Most Americans find it absurd that - as in many European countries - more than thirty television programs are delivered free to their homes: "There is no such thing as a free lunch. If something is offered for free, Americans sense the outbreak of socialism. And they are suspicious of it.
American cable television has lost much of its former appeal in recent years. It often offers only a small number of channels and is extremely susceptible to interference in rural areas. With customer service that is abysmal by American standards, the cable companies themselves have paved the way for satellite providers.
Cable TV still has 65 million customers
For a long time, it looked as if the globally operating media tycoon Rupert Murdoch also wanted to stir up the digital TV market in the USA. A few years ago, he announced that he wanted to offer a digital satellite system with 500 TV channels via EchoStar. He did so at a time when DirecTV had just 200 channels on offer.
To this end, EchoStar and Murdoch's partner group MCI Communications had together bought and reserved more than half of the satellite slots in the USA. But then Murdoch decided to abandon his ambitious satellite plans and sold ASkyB's two satellites to competitor PrimeStar for $1.1 billion.
The operators of terrestrial and cable television had succeeded in rolling thick political stones in the path of EchoStar and Murdoch. The partnership broke down over this. For a while, EchoStar was plunged into serious financial turmoil, but it has since managed to pull itself out of it.
Unlike in Europe and Asia, however, satellite TV does not play a major role in the USA. Around 14 million households are supplied via direct broadcasting satellites. That is just under 15 percent of all U.S. TV households. Cable TV, on the other hand, is still much more important, with more than 65 million customers.
In Canada, our neighbor to the north, digital direct-to-home (DTH) satellite television still plays a much smaller role than in the USA. The market leader is Bell ExpressVu with around 215,000 subscribers. Star Choice follows in second place with 190,000 subscribers.
Murdoch wants to reach two-thirds of the world's population
For global media tycoon Rupert Murdoch, the success of a worldwide television network was at stake for a while, with which he wanted to supply two-thirds of the world's population with television programs, and possibly still wants to do so.
His ambitions extend far beyond the American and British markets. His News Corporation is now also a big player in Latin America, Asia and the Middle East.
Murdoch's Star TV has been operating in Asia for almost ten years, giving it a know-how edge over most of its competitors. In India alone, Star TV reaches over twenty million households; in Pakistan, the figure is three million. Star TV offers ten channels in India and as many as twelve in Pakistan. Yet only two to three of the channels are English-language. Star TV has long known that the global TV business is also done locally.
The total number of subscribers to Star TV, which broadcasts in 53 countries worldwide, is over 300 million households. In China alone, the Chinese-language entertainment channel Phoenix, which is 45 percent owned by Murdoch, has a technical reach of 36 million households.
Today, Star TV dominates the digital TV business throughout Asia and beyond in parts of the Middle East and North Africa. In the People's Republic of China alone, it operates nine channels. In Hong Kong, it even has more than ten channels.
Nevertheless, it can also be found in Taiwan with nine channels, all of which are geared to local viewing needs. Not a single one is some British or American program bouquet that is simply regurgitated in front of Chinese audiences.
There is hardly a country in Asia where Star TV is not represented with its own digital TV offering today: in the Philippines, Australia, Papua New Guinea, New Zealand, Thailand, Vietnam, Malaysia, Singapore, Macao, Korea, Indonesia, Bangladesh, Sri Lanka and Brunei, Star TV is just as present as in Israel, Kazakhstan, Uzbekistan, Georgia, the Maldives or New Caledonia.
In Japan, the gold rush mood has evaporated
Only in Japan has digital television been as successful as it has been in the United States. In 1996, Rupert Murdoch's Star TV was the first provider to go on the air there with relatively modest programming. At its peak, there were six competing providers alone: PerfecTV, an all-Japanese company; DirecTV, the American communications company that operates in Japan with Japanese partners; JSkyB, from Rupert Murdoch's News Corporation; Star TV, also from Murdoch's News Corporation; and SkyD, again an all-Japanese company.
In Japan, too, the gold-rush atmosphere of the early pioneering years has long since faded. A major shakeout has drastically reduced the number of providers. Some of the foreign providers have gotten their noses bloody in the xenophobic atmosphere of the Japanese media landscape: first and foremost Rupert Murdoch. When he bought into the TV Asahi channel in 1996, it triggered a real uproar in Japan. Nine months later, he sold his shares again and concentrated all his efforts on pushing the digital satellite TV package JSkyB into the reluctant market.
That, too, failed. And in early 1998, Murdoch sold his satellite channel again to market leader PerfecTV, which renamed itself SkyPerfecTV. The market leader, SkyPerfecTV, is expected to have over two million subscribers this year. The Japanese branch of the Hughes Group, DirecTV Japan, has barely managed to reach under 400,000 subscribers in the three years since its launch in the fall of 1997.
The basis for digital TV is particularly favorable because the Japanese are among the world's busiest TV viewers. On average, they spend more than four hours a day in front of the screen. If it weren't for the Americans, they'd be the world champions in continuous gawking.
In terms of distribution, digital TV providers are concentrating on the almost ten million Japanese satellite households. Fewer than three million households in Japan are wired. 43 million households still receive their TV programming via antenna. Even in Japan, a high-tech country, people often only boil with water.
This also refers to the economic situation of digital satellite television: The two unequally strong competitors, SkyPerfecTV and DirecTV Japan, are still far from being in the black. It would actually have to go with the devil if both were to survive at all in the long term.
All indications are that DirecTV Japan will not be able to hold its own against domestic competition in the longer term and will be swallowed up or creep out of the market sooner rather than later.
Smooth establishment of DTV in African countries
The spread of digital television depends least of all on a country's level of technical development. The media policy constellation is at least as important. For example, digital television services have established themselves relatively smoothly in some African countries such as Namibia, Zimbabwe, Angola and Malawi - all of which are not exactly among the top global nations in the entertainment industry. Conversely, in some highly developed industrialized countries, digital television has remained virtually stuck in the tough quagmire of media politics to this day.
37 countries in Africa, the Middle East, Greece and Cyprus can receive around forty television channels via satellite. As early as October 1995, MultiChoice launched DStv in South Africa, a digital program offering that now has around 200,000 subscribers. It almost goes without saying that MultiChoice customers tend to be white and wealthy. The program bouquet is geared accordingly.
Most of the programs are offered in English, three in other European languages as well as in Chinese and Hindi. African languages and dialects do not appear at all on African digital satellite television. Brave new world.
Television of the future

This is the third installment in the series of articles on "Television of the Future. In it, Wolfgang J. Koschnick describes and analyzes the slow spread of digital television in the non-European world. The fourth and final installment examines the situation and the manifold problems of digital television in
Rapid growth

DirecTV PrimeStar EchoStar Total
September 1999 5,923,000 1,800,000 2,972,000 10,695,000
October 1999 6,138,000 1,600,000 3,113,000 10,851,000
November 1999 6 365 000 1 500 000 3 250 000 11 115 000
December 1999 6 679 000 1 400 000 3 420 000 11 499 000
January 2000 6,879,000 1,200,000 3,540,000 11,619,000
February 2000 7 095 000 1 100 000 3 650 000 11 845 000
March 2000 7 360 000 1 000 000 3 865 000 12 225 000
April 2000 7,670,000 800,000 4,005,000 12,475,000
May 2000 7,960,000 600,000 4,155,000 12,715,000
June 2000 8 242 000 435 000 4 310 000 12 987 000
July 2000 8,542,000 280,000 4,460,000 13,282,000
August 2000 8 864 000 110 000 4 612 000 13 586 000
September 2000 9 017 000 - 4 760 000 13 777 000
Source: Koschnick Europe Editorial Office.
Channel name DirecTV PrimeStar* EchoStar

Shareholders GM Hughes Electronics News Corp. (30 %), Dish Network (100 %)
(71.5 %), PanAmSat TCI (14 %),Cox Cable
(28.5 %) Communications (14 %),
Continental Cablevision (14 %);
Time Warner (14 %), Comcast
Cable Communications (14 %)
Start of broadcasting June 1994 April 1996
Number of subscribers** 9 017 000 -- 4 760 000
Number of TV channels over 500 over 500*** 500
* PrimeStar has been a wholly owned subsidiary of DirecTV since April 1999.
** Status September 2000
*** until August 2000
Source: Koschnick editorial office
Channel name SkyPerfecTV DirecTV Japan

Shareholders 28 Japanese companies: Japan Satellite Hughes Communications (35 %), Culture
Systems (13.9 %), Itochu (13.85 %), Convenience Club (35 %), Matsushita (10 %),
Nissho Iwai (13.85 %) , Mitsui (13.85 %), Mitsubishi (5 %), Mitsubishi Electric (5 %),
Sumitomo (13.85 %), Sony (5 %), Space Communications (5 %),
Toyota (5 %), NEC (3 %), NTT (2,4 %), Dai Nippon Printing (5 %).
Sharp (1.5 %), Toshiba (1.5 %),
Matsushita (1.5 %), Yoshimoto Kogyo
(1.5 %) and 15 more
Start of broadcasting October 1996 Autumn 1997
Number of subscribers 1 597 100 386 600
Number of TV channels over 150 over 150
Source: Koschnick editorial office (as of mid-2000)

Digital television is experiencing various teething problems around the world: In the U.S., it is making rapid progress, but in Europe and Asia, viewers are far from joining inBy Wolfgang KoschnickThere is virtually no doubt: The future belongs to digital television. But the future is a long time coming. In Europe, progress is so slow that it could give you the creeps. In the USA, in Asia and even in some parts of Africa, things are moving a little more quickly, but almost everywhere there are great difficulties in recruiting larger audiences for the new TV offering.
The Americans can already look back on six years of experience with digital television. In 1994, the Direct Broadcast Satellite System (DBS) got off to a very tentative start. Today, some 14 million Americans are supplied by satellite with the programming offered by the Digital Satellite System (DSS).
250000 more DTV consumers per month in the USA
The current growth rates are tremendous. Every month, another quarter of a million Americans opt for digitally transmitted satellite TV. In the U.S., satellite reception is now de facto synonymous with digital television: Digital television enters homes virtually exclusively via satellite.
In the course of the last few years, there has been a significant shakeout among the five providers, some of which were large and some small, all of which were in fierce competition with each other. They have largely bought each other out. And now there are practically only two competitors left on the market.
The leader was and is DirecTV, based in El Segundo, California. It delivers a basic offering and a range of pay-per-view channels: more than 500 channels in all, from which subscribers are spoiled for choice. The most attractive elements include feature films, sports, music and news. Exclusive program packages with popular sporting events and over fifty channels of pay-per-view movies in particular have catapulted the company to the top in its first few years.
DirecTV is a subsidiary of Hughes Electronics Corporation, which is also involved in the U.S. space program and builds satellites itself. The company has long since transformed itself into a globally operating TV broadcaster. Its main focus is on Latin America and Asia. Through a majority stake in Galaxy Latin America, DirecTV controls the Latin American market with programming in eleven countries (Brazil, Mexico, Venezuela, Colombia, Chile, Ecuador, Guatemala and others).
In the U.S., DirecTV is the market leader with over nine million subscribers and a market share of 65 percent. The pioneering years of digital satellite television in the U.S. were marked by fierce competition between DirecTV and PrimeStar. For a while, the two companies were almost tied in terms of subscribers. But then DirecTV surged ahead of its rival. Finally, in April 1999, it swallowed PrimeStar with its then 2.3 million subscribers. In those days, the entire offering was seamlessly transferred to DirecTV.
Number two for many years, it emerged as a joint venture of several cable companies: Tele-Communications Inc. (TCI), Time Warner, Continental Cablevision, Comcast and Cox joined with General Electronics Americom to form PrimeStar Partners, based in Bala Cynwyd, Pennsylvania. At its peak, PrimeStar broadcast over 500 channels.
While DirecTV subscribers must purchase the dish antenna and receiver, PrimeStar operated on a rental basis. Equipment rental and subscription costs were added up to a monthly amount, which started at one dollar per day for the smallest program combination. Therein lay the crucial difference: DirecTV competed from the outset as a high-power DBS system, PrimeStar as a medium-power DBS. For DirecTV, you can get by with fairly small satellite dishes. Those for PrimeStar are a bit bigger. In the pioneering phase, when the reception equipment for DirecTV still cost a good $600, PrimeStar profited from this calculation. As the price of the equipment fell, its attractiveness diminished considerably.
The competition has shrunk, but is not sleeping
Based in Littleton, Colorado, Dish Network is part of EchoStar Communications Corporation and now also offers more than 500 channels. After years of crawling, Dish Network has brought it to more than three million subscribers in recent years. It is currently the fastest growing provider of digital satellite television. Today, it has 4.76 million program subscribers. DirecTV's and EchoStar's program offerings differ only marginally from one another, and prices are now also at roughly the same level.
Meaningless today is AlphaStar in Stamford, Connecticut, a subsidiary of Canadian Tee-Comm Electronics in Milton, Ontario, and on the market since July 1996. It offers a choice of 110 channels and still has about 10000 subscribers. AlphaStar uses a satellite owned by the telephone company AT&T and now plays a role virtually only in Canada.
More successful than VCRs and CD players
The programs chosen by most digital TV users are sports broadcasts. Advantage: Even games that are only shown regionally by the normal broadcasting networks can be seen throughout the country. However, this is quite expensive. On average, each DSS customer pays $75 a month to choose from around 500 different offerings.
In the USA, digital television has caught on in no time at all. Just 13 months after its launch in October 1994, DirecTV registered its millionth paying subscriber. Neither VCRs nor CD players have ever gained a foothold in a country so quickly. Today, digital television is available in about one in eight American households.
The acceptance of digital television in the U.S. has been facilitated by the fact that Americans are used to being asked to pay for an expanded television service. Cable television is a costly affair in America, and no American says a word about it anymore. Either you have it and pay for it, or you don't.
Most Americans find it absurd that - as in many European countries - more than thirty television programs are delivered free to their homes: "There is no such thing as a free lunch. If something is offered for free, Americans sense the outbreak of socialism. And they are suspicious of it.
American cable television has lost much of its former appeal in recent years. It often offers only a small number of channels and is extremely susceptible to interference in rural areas. With customer service that is abysmal by American standards, the cable companies themselves have paved the way for satellite providers.
Cable TV still has 65 million customers
For a long time, it looked as if the globally operating media tycoon Rupert Murdoch also wanted to stir up the digital TV market in the USA. A few years ago, he announced that he wanted to offer a digital satellite system with 500 TV channels via EchoStar. He did so at a time when DirecTV had just 200 channels on offer.
To this end, EchoStar and Murdoch's partner group MCI Communications had together bought and reserved more than half of the satellite slots in the USA. But then Murdoch decided to abandon his ambitious satellite plans and sold ASkyB's two satellites to competitor PrimeStar for $1.1 billion.
The operators of terrestrial and cable television had succeeded in rolling thick political stones in the path of EchoStar and Murdoch. The partnership broke down over this. For a while, EchoStar was plunged into serious financial turmoil, but it has since managed to pull itself out of it.
Unlike in Europe and Asia, however, satellite TV does not play a major role in the USA. Around 14 million households are supplied via direct broadcasting satellites. That is just under 15 percent of all U.S. TV households. Cable TV, on the other hand, is still much more important, with more than 65 million customers.
In Canada, our neighbor to the north, digital direct-to-home (DTH) satellite television still plays a much smaller role than in the USA. The market leader is Bell ExpressVu with around 215,000 subscribers. Star Choice follows in second place with 190,000 subscribers.
Murdoch wants to reach two-thirds of the world's population
For global media tycoon Rupert Murdoch, the success of a worldwide television network was at stake for a while, with which he wanted to supply two-thirds of the world's population with television programs, and possibly still wants to do so.
His ambitions extend far beyond the American and British markets. His News Corporation is now also a big player in Latin America, Asia and the Middle East.
Murdoch's Star TV has been operating in Asia for almost ten years, giving it a know-how edge over most of its competitors. In India alone, Star TV reaches over twenty million households; in Pakistan, the figure is three million. Star TV offers ten channels in India and as many as twelve in Pakistan. Yet only two to three of the channels are English-language. Star TV has long known that the global TV business is also done locally.
The total number of subscribers to Star TV, which broadcasts in 53 countries worldwide, is over 300 million households. In China alone, the Chinese-language entertainment channel Phoenix, which is 45 percent owned by Murdoch, has a technical reach of 36 million households.
Today, Star TV dominates the digital TV business throughout Asia and beyond in parts of the Middle East and North Africa. In the People's Republic of China alone, it operates nine channels. In Hong Kong, it even has more than ten channels.
Nevertheless, it can also be found in Taiwan with nine channels, all of which are geared to local viewing needs. Not a single one is some British or American program bouquet that is simply regurgitated in front of Chinese audiences.
There is hardly a country in Asia where Star TV is not represented with its own digital TV offering today: in the Philippines, Australia, Papua New Guinea, New Zealand, Thailand, Vietnam, Malaysia, Singapore, Macao, Korea, Indonesia, Bangladesh, Sri Lanka and Brunei, Star TV is just as present as in Israel, Kazakhstan, Uzbekistan, Georgia, the Maldives or New Caledonia.
In Japan, the gold rush mood has evaporated
Only in Japan has digital television been as successful as it has been in the United States. In 1996, Rupert Murdoch's Star TV was the first provider to go on the air there with relatively modest programming. At its peak, there were six competing providers alone: PerfecTV, an all-Japanese company; DirecTV, the American communications company that operates in Japan with Japanese partners; JSkyB, from Rupert Murdoch's News Corporation; Star TV, also from Murdoch's News Corporation; and SkyD, again an all-Japanese company.
In Japan, too, the gold-rush atmosphere of the early pioneering years has long since faded. A major shakeout has drastically reduced the number of providers. Some of the foreign providers have gotten their noses bloody in the xenophobic atmosphere of the Japanese media landscape: first and foremost Rupert Murdoch. When he bought into the TV Asahi channel in 1996, it triggered a real uproar in Japan. Nine months later, he sold his shares again and concentrated all his efforts on pushing the digital satellite TV package JSkyB into the reluctant market.
That, too, failed. And in early 1998, Murdoch sold his satellite channel again to market leader PerfecTV, which renamed itself SkyPerfecTV. The market leader, SkyPerfecTV, is expected to have over two million subscribers this year. The Japanese branch of the Hughes Group, DirecTV Japan, has barely managed to reach under 400,000 subscribers in the three years since its launch in the fall of 1997.
The basis for digital TV is particularly favorable because the Japanese are among the world's busiest TV viewers. On average, they spend more than four hours a day in front of the screen. If it weren't for the Americans, they'd be the world champions in continuous gawking.
In terms of distribution, digital TV providers are concentrating on the almost ten million Japanese satellite households. Fewer than three million households in Japan are wired. 43 million households still receive their TV programming via antenna. Even in Japan, a high-tech country, people often only boil with water.
This also refers to the economic situation of digital satellite television: The two unequally strong competitors, SkyPerfecTV and DirecTV Japan, are still far from being in the black. It would actually have to go with the devil if both were to survive at all in the long term.
All indications are that DirecTV Japan will not be able to hold its own against domestic competition in the longer term and will be swallowed up or creep out of the market sooner rather than later.
Smooth establishment of DTV in African countries
The spread of digital television depends least of all on a country's level of technical development. The media policy constellation is at least as important. For example, digital television services have established themselves relatively smoothly in some African countries such as Namibia, Zimbabwe, Angola and Malawi - all of which are not exactly among the top global nations in the entertainment industry. Conversely, in some highly developed industrialized countries, digital television has remained virtually stuck in the tough quagmire of media politics to this day.
37 countries in Africa, the Middle East, Greece and Cyprus can receive around forty television channels via satellite. As early as October 1995, MultiChoice launched DStv in South Africa, a digital program offering that now has around 200,000 subscribers. It almost goes without saying that MultiChoice customers tend to be white and wealthy. The program bouquet is geared accordingly.
Most of the programs are offered in English, three in other European languages as well as in Chinese and Hindi. African languages and dialects do not appear at all on African digital satellite television. Brave new world.