Digital doubt

When the free diginet sample period came to an end in early January, the mainstream media suddenly sat up and took notice. Reports popped up across the country, and pundits hurriedly tried to determine whether the launch was a boom or a bust. But the resulting stream of misinformation - including incorrect ratings cited in newspapers across the country - have just muddied the issue.

When the free diginet sample period came to an end in early January, the mainstream media suddenly sat up and took notice. Reports popped up across the country, and pundits hurriedly tried to determine whether the launch was a boom or a bust. But the resulting stream of misinformation – including incorrect ratings cited in newspapers across the country – have just muddied the issue.

For example, early reports that only 2% of Canadian homes are tuning in to the new digital specialty channels are misleading, says Walter Levitt, VP marketing for Alliance Atlantis Broadcasting. That was a share figure, he says, meaning that 2% of the total television viewing hours – not homes – were devoted to digital. Furthermore, the figure represented just the first few tentative weeks of the launch, which thanks to Sept. 11, saw viewing patterns that were ‘a bit wonky.’

In fact, disputes over the first diginet numbers have made it clear that measuring the success of these channels may be much more complicated than initially thought.

Nielsen Media Research (Canada) is struggling with a measurement system that wasn’t really designed to measure such small audiences, and different people seem to be espousing different indicators. Below we look at how the digitals have fared by subscriber, viewership and advertising sold, and find that while not all will survive, the digital launch was perhaps not the complete disaster some said it was.

Growth of the digi-verse

Nielsen Media Research reports that the total number of digital households in Canada is just less than 2.5 million, out of a total of 12 million television-watching households. That means that roughly 1 in 5 households, or 20%, have access to digital signals, either via cable or satellite.

Meanwhile, Decima Publishing, which puts out quarterly Digital Domain reports, counts by individual digital subscribers, rather than households. (The two measures aren’t exactly the same because some households have more than one set-top box.) Nonetheless, Decima came up with approximately the same figure, reporting 2.5 million digital subscribers out of a total universe of 10.5 million cable and satellite subscribers in Canada. This means that of all households that pay to subscribe to some kind of television service, 24% were subscribing to digital as of August/September, 2001.

Either way, digital services are making inroads. Decima reports that those 2.5 million digital subscribers represent a significant 10% growth from May/June to August/September 2001 – and that’s over the summer, when people are watching less TV, says Mario Mota, publisher and editor-in-chief of Decima Publishing. Once the year-end data is in for 2001, Mota fully expects the number of subscribers to have further climbed to 2.8 million.

Even better for the diginets, because digital boasts new channels, better sound and picture, interactive program guides, expanded pay-per-view, video-on-demand and Internet capabilities, Mota forecasts that the subscriber pond will reach 3.8 million by the end of 2002.

Give it five to seven years, he says, and the analog-versus-digital scale will balance at 50/50, then start tipping in favour of digital. Right now it’s 76% analog and 24% digital.

But how much are people

watching?

According to Nielsen, the 2.5 million digital homes in Canada translates into a total possible digital universe of 7 million viewers ages 2+. Of those, 5.2 million viewers have sampled the digital channels (for at least one minute) over the last two months of 2001, says Levitt, quoting Nielsen’s total reach figures.

However, a more useful measure is the share of total viewing hours commanded by digital during those same two months (Nov. 5 to Dec. 30, 2001). During that time – the most stable period during the free preview – the new diginets as a group accounted for 9.6% of all television hours watched by viewers with access to digital.

‘That means roughly 10% of the time those 7 million people spent watching TV, they were watching digital.’ says Levitt. ‘That’s a significant shift of viewing habits.’

The digi-verse by channel

The digital share during the preview was on target, says Levitt. But that digital viewing pie is split into over 50 channels, so the individual slices get pretty thin.

In fact, the highest average minute audience (AA) was only 13,600, earned by CanWest Global’s Lonestar. (AA figures represent the number of people watching during an average minute.) The rest didn’t even top a measly 6,000 viewers. (See charts this page.)

Many industry insiders were surprised that Lonestar, which runs oldie westerns, garnered the top spot, earning a 15% share of viewing amongst digital networks. But Sherry O’Neil, VP broadcast buying for OMD Canada, says she originally forecast that diginets with broad appeal, like Lonestar, Biography and Mystery would capture the highest numbers.

The digi-verse by ad dollars

The true measure of a digital channel’s success may not lie in its overall ratings at all, but in its ability to attract advertisers – and the two, while related, don’t always go hand-in-hand.

Like many buyers, Starcom Worldwide’s SVP broadcast investment director Theresa Treutler not only narrows in on a diginet’s unique positioning, but also narrows in on the 18-34 demo. And while overall numbers may not be as high for the narrower niche diginets like TechTV and MTV, those channels are very targeted and therefore appealing to advertisers.

‘Nobody buys 2+ anymore,’ says Treutler, ‘and that’s the inherent value of the whole specialty arena.’

Even so, most buyers agree that the diginets are not going to be competing with analog any time soon.

‘They will always be an add-on,’ says O’Neil.

Top 10 diginets by average minute audience (AA)

(Includes share & average daily reach; persons 2+)

Network (owner) AA (00s) Share (%) Reach (00s)

Lonestar (CanWest Global) 136 15 1494

Animal Planet (CTV) 56 6 2478

Deja View (CanWest Global) 51 6 1722

Showcase Action (Alliance Atlantis) 48 5 2175

SexTV: The Channel (CHUM) 45 5 2728

Men TV (Global/Groupe TVA/Men TV) 40 4 2330

MSNBC (Rogers/Shaw/MSNBC) 40 4 1243

TV Land (Craig) 40 4 1327

Biography (Rogers/Shaw/A&E) 27 3 1256

Mystery (CanWest Global) 27 3 937

Nielsen Digital Index (NDI) covering period: Sept. 10 to Dec. 9, 2001 (13 weeks).

Market: total Canada; homes: digital access only; all data courtesy of ACNielsen.

Top 10 diginets by average daily reach (Persons 18 to 34)

Network Reach (00s)

SexTV: The Channel 847

Men TV 769

Animal Planet 763

Showcase Action 542

Xtreme Sports 462

Edge TV 458

Deja View 447

MTV 423

Discovery Civilization 380

Showcase Diva 331

Nielsen Digital Index (NDI) covering period: Sept. 10 to Dec. 9, 2001 (13 weeks).

Market: total Canada; homes: digital access only; all data courtesy of ACNielsen.