Pending digital TV bonanza promises to create a new competitor to the web

Digital television will combine the interactivity of the web with the simplicity of conventional TV to create a new medium that can compete with the Internet for a large share of online revenues, a senior broadcast executive said. Trina McQueen, executive VP of BCE Inc-owned CTV Inc, said she believes digital TV will do more than just mimic the web. She suggested it might compete head on with the Internet because set top boxes are easier to use than the web. "You can have interactivity without being a technical genius. The opportunities are unlimited to personalize, to imagine, to fool around with the content in ways that really apply to you alone. The benefits and interactivity of the web with the simplicity of television is a terrific marriage." McQueen made her comments April 4 at the Canadian Cable Television Association (CCTA) conference, just hours after the CRTC's deadline for filing of digital TV applications. Kevin Shea, president of Global Television Network Inc, whose company filed 36 digital channel applications, says the companies that link their services with the Internet or develop web site-like channels will have a good chance of surviving, no matter what licence category they're in. "We're learning a lot from the Internet: it's fragment, or be fragmented. The Internet gives you such a luxury of choice in different areas, and now we're seeing this on the television side," Shea told delegates at the conference. McQueen predicted the digital process will result in an explosion of Canadian creativity. "We haven't had the kind of R&D that Hollywood and some of the European countries have," she said. CTV's keen interest in digital was demonstrated when, on April 3, it filed 43 applications for new digital licences. McQueen's comments reflect the enthusiasm of many broadcast executives and producers who were caught up in the sometimes-offbeat creativity of the Category 2 concepts. "One of our Category 2s was thought up in an elevator on Saturday morning and submitted on Monday night," she revealed. "I think the Category 2s are going to be a lot of fun. I think the creativity that was unleashed in those applications is going to be quite dazzling and very interesting." CRTC wades through mountain of applications The CRTC received a whopping 452 applications for new digital licences - the most it has ever received in any call for new applications. Of these bids, 446 are pay and specialty services (91 Category 1; 355 Category 2); two are pay-per-view; and four are video-on-demand. In late May, the commission will make the applications public and set a date for a public hearing to begin in late summer. It's still not known whether the regulator will hold an oral proceeding for the Category 2 applications or deal with them in a paper proceeding. As expected, many of the applicants are partnerships between web-based companies, specialty TV producers, broadcasters, production companies and broadcast distributors. And, while cable executives at last year's CCTA convention warned that they will be very selective about the channels they carry, the buzz at this year's conference was more positive to digital hopefuls. The cable industry now seems to see digital TV as a new service platform offering the potential of new revenues, rather than an extension of the old cable tier system. Specialty channel owners, TV producers and cable executives say it will take innovation and creativity to make many of the new services economically viable. That's why so many of the proposed channels seem more like web sites than TV stations. For instance, there are proposals before the commission for at least two channels that are the equivalent of Chapters.com, Indigo.ca and Amazon.com. Broadcasters say that, in the short-term at least, subscription fees and advertising will be negligible for Category 2 channels, and even the Category 1 licensees aren't being handed a licence to print money. Paul Robertson, president of Corus Entertainment Ltd's television division, said in an interview with Canadian Communications Reports that the CRTC has created a system that will spur creativity among programmers and content producers. His company filed 33 applications— seven in Category 1— with Canadian and U.S. partners, including Nelvana Limited, the CBC, the National Film Board and the Discovery Channel. Robertson says the two-category concept was an innovative way of proceeding, because, in part, it represents a traditional way of licensing, and "the Category 2s will be a far more open, innovative approach, and we think that's an appropriate transition."He says the Category 2 channels may give Canadian digital TV the critical mass that it needs to reach acceptance by consumers. "What will be required is programming that is responsive to what the market wants," he told CCR. "It will be lean in the early going, but I think in two or three years we will be able to build a business on this. Category 2 will be an extremely creative group of offers. It will be fun to see what kind of things people are coming up with." Some companies expected to merge applications Michael MacMillan, president of Alliance-Atlantis Communications Inc, says he expects some mergers or co-operative projects among companies that win Category 2 licences for channels with competing concepts. His company and Corus have both filed applications for book channels, and there are other Category 2 submissions with similar plans. "If the commission launches six fashion channels in Category 2, I bet wiser heads will prevail and get together to make one logical business out of it," he told CCR. Still, he says, there seems to be enough range in the digital applications for the creation of a broad spectrum of programming that will hasten the roll out of digital and spur Canada's TV producers. "Who knows what kind of innovative ideas there are out there? Eventually, competition in (Category 2) is a healthy thing." Regardless, the CRTC should reconsider the relatively small number of Category 1 licences it plans to issue, Astral Communications Inc chair André Bureau said in an interview. His company has applied for 16 licences. "The commission came out and said about ten new channels. I would hope that the commission would think again and not feel constrained by those numbers because I think that what's important is, 'are there good applications there?' And if so, let us try them." He wants to see "seven, eight, nine (Category 1s), so we can have a good roll-out of digital." Still, Bureau said he supports the new system because it combines the safety of the old licensing system with Category 1s and a chance for innovation and creativity with Category 2s. And, he believes most of the channels will succeed in the marketplace. "Every time there is a call for new services, people think that 'what can you add to that?' After TSN and MuchMusic were licensed, everybody, including the CCTA and the CAB, (Canadian Association of Broadcasters) were saying 'that's enough, the market can't support more than that.' Now we're 53 services from that time, in addition to these, and it's still working," he said.Cable companies seem ready to embrace the new digital concepts, and asked the CRTC to allow consumers to decide what they want. The CCTA opened the conference by releasing a report that pushes for less regulation and more market choice.CCTA president Janet Yale says the process shouldn't be about the CRTC picking the winners. Entrepreneurs should be judged on the quality of their product and given a chance in the market, she said. "I think it's the market and the customers that should pick the winners in this environment. It's not going to be subscription revenues that will determine success or failure. It's interactive applications, e-commerce or otherwise, and whether or not you have interesting products that will appeal to consumers. "We're content-hungry," she added. "What's going to drive the launch of digital and the success of digital is content."

Pending digital TV bonanza promises to create a new competitor to the web

Broadcast | April 13, 2000

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