UK digital TV firm ONdigital is talking to utilities about possible investments.
UK media group Granada has confirmed that it has held talks with a number of utilities looking for a partner to drive its jointly-owned digital TV arm ONdigital and reduce the burden of heavy losses that it has accrued, following first-half pre-tax losses of $96 million. The company believes that this proposition may be of great interest to a number of utility suppliers who are looking to develop the range of products it can offer its clients. The advantages are at present two-fold to potential utilities.
First, if the company performs well and turns its present losses into a profit, any investment will certainly reap the appropriate rewards. Secondly, it will give a supplier the ability to offer its products and services to its audience in a ‘walled garden’ format. With access to ONdigital’s 1.1 million customer base, a potential supplier would be able to market this particular audience aggressively, and without the direct intrusion of other competitors.
The added advantage is that with this medium, the costs of acquisition and service will be greatly reduced, thus providing higher margin customers to the company. But the utility has to consider what the return on the investment will be and how long it will take before profitability is reached, with all companies in this area facing up to tough trading conditions.
A further consideration is whether digital TV will actually be a good way of attracting a significant number of customers to take up utilility services. Datamonitor research suggests that digital TV companies are destined to be successful in the future, but the uptake of utility services is not so clear. However, as the saying goes, he who takes the risk reaps the reward!
