The UK is set to retain its lead in the digital TV market.

Digital terrestrial in the UK was re-launched as Freeview in October 2002, following the collapse of pay-TV operator ITV Digital. Freeview is the first major digital service to directly target the free-to-air or non-pay-TV audience, generating strong demand for low cost set-top boxes.

Freeview’s positioning as an entirely free-to-air offering, requiring only the purchase of a set-top box, means that it is easily understood by consumers and strongly differentiated from pay-TV offerings on digital cable and satellite.

As a result, it is able to expand the interest in digital TV considerably, without posing a major threat to digital satellite or cable. Indeed in the longer term, Freeview may act as a stepping-stone to pay-TV services, placing the UK at the forefront of developments in digital TV.

The UK is currently the most developed digital TV market in Europe. By the end of 2002, 39% of households had digital TV. Accelerating uptake of Freeview and continued but ultimately slowing growth of digital cable and satellite will result in 72% of UK households receiving digital TV by the end of 2007. This will mean that the UK will remain Europe’s largest digital TV market.

In 2002, digital uptake slowed considerably in many European markets including the UK. It was an extremely difficult year for the digital TV industry, with development hindered by numerous factors including operators’ financial problems and delayed service launches. In the UK the closure of ITV Digital and re-financing of NTL and Telewest led to significant growth only of digital satellite services.

However, 2002 was in many ways a turning point for the digital TV industry; marking the transition from the initial pay-TV dominated market to a more varied mass-market across Europe. Continued growth of digital TV is becoming increasingly dependent on the free-to-air TV audience, whether in already developed digital markets such as the UK or in those still waiting for digital TV to really take off, including the Netherlands and Germany.

Related research: Datamonitor, Digital and Interactive TV Markets: Service development and uptake to 2007 (DMTC0866)

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