After a year and a half on the airwaves, all of the digitals are still operating, but penetration is still below forecast, audiences are still small, and a recent CRTC report confirms that the channels are still bleeding money.

As 2002 came to a close, Mario Mota of Ottawa’s Decima Publishing estimates there were about 3.5 million subscribers to digital services in Canada. Mota says there has been a 4% to 5% growth in the digital subscriber base over the last year, and he predicts that by the end of 2003, there will be about 4 million total.

‘There’s been steady growth,’ says Mota. ‘This bodes well for distributors to sell more channels and helps the diginets to have a larger base to work from.’ However, according to Nielsen data (as measured from Sept 2 to Dec 1/02), those subscribing to digital services only spend 6% of their viewing time actually watching the new channels.

The top-rated digital channel among adults 18 to 49, according to the latest Nielsen Media Research numbers, is the Alliance Atlantis-owned Showcase Action, with an average-minute audience of 4,000 viewers. Rounding out the top-five channels among this age group are SexTV, Scream, Animal Planet and Deja View, the last of which barely registers 2,000 viewers, with an average-minute audience of 1,800.

‘The diginets that have clearly different brands are doing the best, like Showcase Action, Showcase Diva and Lonestar,’ says Sarah Ivey, VP strategic planning at Toronto-based Initiative Media. ‘[But] the diginets don’t have enough audience to do much, unless they have a program that fits with a particular brand opportunity.’

According to figures compiled by the Canadian Radio-television and Telecommunications Commission, the 47 digital channels suffered over $148 million in losses, while generating revenues of less than $50 million in 2002. Taking this into consideration, Theresa Treutler, SVP/broadcast investment director at Toronto’s Starcom Worldwide, says, ‘the first message is that [the diginets] ought to be extremely negotiable. Some cash is better than no cash. There’s no such thing as a must-buy in the world of diginets.’

Of the losses, Initiative’s Ivey says, ‘It’s part of a much larger issue. They brought on too much and now are trying to find out what works in the conglomerate and what has to go. Certain brands that aren’t differentiating enough are just going to be shut down.’

However, Ivey says she is using the digitals, especially when it comes to reaching youth. ‘For the youth demo, there’s not a lot of variety on the regular [non-digital] channels,’ she explains.

For instance, recently Ivey arranged a buy for Levi Strauss Canada on MTV Canada. The fit was right, she says, because both are sponsors of World AIDS Day.

‘Levi’s has a very good association with music, so MTV has always been a good match,’ adds Steve Aronovitch, group broadcast director at Initiative. ‘And their audience is growing based on the programming they’ve been getting.’ Initiative did a base media buy, situating Levi’s on MTV’s top-rated programs like The Osbournes and Aronovitch says they’ve been happy with the results and will continue to use MTV for Levi’s in the future.

Starcom’s Treutler says MTV Canada was also a good choice for a current buy for Buena Vista Home Entertainment’s launch of season one of The Osbournes on DVD.

She says the net was an obvious pick for this particular buy, since the hit reality-com originally premiered on MTV, and Starcom was able to position the ads within similar MTV shows like Jackass and Road Rules.

However, Treutler cautions, ‘We only reached a small percentage of adults 18 to 34. This buy hones in, but doesn’t reach a large portion of the target group. No digital can at this point.’