The South African Digital TV Migration and the Future for Broadcasters

1. The South African Digital TV Migration and the Future for Broadcasters Yusuf Nabee DTT Project Leader SABC Jennifer Daniel G M Audience Strategy and Research e.tv

2. CONTENTS • History of TV in South Africa • Television share – Free to Air and Pay TV • What is DTT • Managing the Migration Time line 2005 – 2010 • Learnings from the migration process to date • DTT progress in the rest of the world • The Future for Broadcasters • Conclusion • DTT Trial Research results

3. Key Landmarks in the History of Television in South Africa Expected DTT Launch 1st Half of 2010 1998 e.TV First FTA TV Station in SA 1995 DSTV 1986 M-Net 2007 5 Pay TV Licences awarded: Telkom Media, ODM, eSat , Multichoice WOW 1982 TV 2/3 SABC 1996 SABC channels relaunched as S1, S2,S3 1978 Commercials TV 1992 TV 2/3/4 incorporated into CCV 1984 TV 4 1976 5Hrs of TV/Day No Advertising

4. Growth of Number of TV Channels in S.A.

5. TV Households - 2008 9,074 000(82% of Households)

6. TELEVISION Yesterday Viewership 16,758 12,099 11,802 7,986 4,541 980 DStv Source: AMPS 2008 Main Branded AB (Jan 08 – Dec 08)

7. What is DTT? A definition: “Bigger, better, enhanced television”

8. What are the primary benefits? • Better quality picture • Better sound quality • More channels • New services

9. What is DTT?

10. ICASA’s proposals indicate there will be • at least 21 channels (but no HD channels) • space reserved for new players

11. Why DTT? • Migration to DTT happening worldwide – analogue will not be protected from interference after 2015 • Great spectrum efficiency realized from broadcasters moving from analogue to digital transmission systems • Freed spectrum commonly known as “the digital dividend” - can be used for other services, including telecommunications • This is the major reason why countries migrate to DTT

12. Digital Terrestrial Television ( DTT) 31,109m (27%) Has this been done anywhere else in the World? • All countries will do the migration to ensure ongoing co-ordination and protection from interference. • Some Countries that are advanced in their migration process are: • United Kingdom • New Zealand • Sweden • United States • France • Mauritius

13. Countries that have completed Analogue switch off Table 3:DTT Penetration versus Coverage

14. Selected Countries: Digital TV Migration

15. Selected Countries: Digital TV Migration

16. What SA TV will look like in DTT

17. What TV in SA will look like in the future • Additional language services • Mobile Broadcasting through technologies such as DVB-H • The increasing penetration of PVR decoders • The roll-out of Video-on-demand services • Enhanced access to affordable bandwith

18. …There will be data services, including an EPG…

19. Sweden UK Australia • ….Channels will be marketed under a common brand • This has proved a key driver for success in other DTT markets…. Source: CapGemini

20. Managing the Migration

21. Managing the Migration • Migration to DTT an enormous challenge for many countries • Challenge is made particularly hard in developing countries by the extent of the resources required e.g. dual illumination • Migration is also complex and time-consuming • For these reasons, a Digital Migration Office is usually appointed to manage the migration • A DMO can do things broadcasters and government alone cannot easily achieve

22. Managing the Migration • In SA, the DMO is called the Digital Dzonga • Digital Dzonga overseen by an Advisory Council made up of 14 non-executive members representing key role-players of the DTT value chain • Wide range of experience and expertise on the Council • Has been in existence since June 2008 • Funded by government • First staff joining 3rd quarter 2009 • Digital Dzonga has also started a number of working groups which interested parties may join

23. DTT Progress to Date • Digital Migration process has been underway since 2005 • June 2005 – Nov 2006: Appointment of Digital Migration Working Group (DMWG) consisting of industry, labour, community and government representatives to make recommendations on the migration process • March 2007 – Aug 2008: Government consultation on digital migration policy and STB specification • June 2008: Appointment of Digital Dzonga to oversee migration • Nov 2008: Start of broadcaster trials

24. DTT Progress to Date • Jan – June 2009: Regulator consultation on and finalisation of DTT regulatory framework • June 2009: Finalisation of STB standards • July 2009: Go Digital Call-centre and website go live Next steps • Aug 2009: Finalisation of frequency plan • Nov 2009: Conformance scheme put in place • Jan 2010: Start of full scale “Go Digital” communications campaign • April – June 2010: Targeted commercial launch window

25. Phases of Digital Migration • To begin first phase rollout of transmitter network • To allow for feedback, refinement and evaluation • To prepare and test services • To make DTT services available to the market • To expand transmitter network to full coverage • Analogue and digital networks running in parallel • To begin phased switch-off of the analogue network • Reduced dual illumination as analogue is switched off • Maintenance of DTT network • Planning for digital dividend • Mass rollout of help schemes

26. Learnings • A Digital Migration office must be put in place that is tasked with driving the migration. All affected stakeholders must be represented • Allow time for consultation on the policy, regulatory framework and technical standards – it can take longer than envisaged • At launch, a critical mass of viewers must have access to the DTT signal (SA targeting 60% at launch) • There must be some new channels available at launch to drive consumer take-up of the STB

27. Learnings • Budget for an extensive marketing and communications campaign – this is one of the major costs. Make sure it clearly outlines the benefits of digital TV and provides clarity on what end-user equipment is required • A Contact Centre must be provided to answer any consumer queries • A conformance scheme must be put in place to test STBs so that only conformant product is sold to consumers

28. Future for Broadcasters • Increased Competition • After Dual illumination has taken place , Icasa will license more channels • The available space on the mux’s will be taken up by competitors to the FTA channels

29. Future for Broadcasters • Fragmentation of audiences • Audiences will have a much wider choice of channels • The measurement of these audiences will be a challenge • Increase in available inventory which will drive down rates • The above will result in a decrease in advertising revenue.

30. Future for Broadcasters • Higher Costs of Programming • Multiple channels will necessitate much more money being spent on producing local programming and purchasing international content • The amount of money broadcaster will be willing to spend per program will decline. This may impact on the quality of local content .

31. Future for Broadcasters continued • Broadcasters will have to diversify and will have to look for other forms of revenue as the reliance on fee-to-air advertising revenue will no longer be adequate.

32. Conclusion • DTT brings many advantages to the viewer: • For a reasonable one-off cost, viewers will receive many more new television channels and other services • It is clear that DTT will transform SA television and the experiences of all viewers. • Broadcasters will be faced with many challenges

33. DTT Pilot • The DTT pilot phase was started on 1 November 2008 • SABC led free-to-air DTT trial • Parallel MNet Pay TV trial • Free-to-air trial available in JHB, Pretoria and Durban only • Approximately 2500 participants on trial to date, including a DTT trial research panel of 1500 households

34. DTT Pilot • Includes 9 TV channels and 19 radio stations: • SABC 1,2,3 • SABC Entertainment • SABC Sport • SABC Education • SABC News International • eTV • eTV Classics • All SABC radio stations + YFM

35. general Research approach to the dtt trial

36. DTT TRIAL - RESEARCH APPROACH • Objectives • To test the DTT service, infrastructure and functionality of the set-top boxes. • To assess the appeal of new channels. • Research Approach • A household panel. • The research trial consists of several phases expected to continue into April 2010. • Each participating household given a STB. • A Call Centre (toll-free), was established by the SABC. • Self-Completion Diaries (7 Days)

37. DTT TRIAL - RESEARCH APPROACH • Universe • The TAMS (Television Audience Measurement Survey) Universe - Universe for South African Television Households . • Sample: • The sample comprises Households that have TV licence • The DTT Trial signal three transmitters (Johannesburg, Pretoria and Durban). Currently no “gap-fillers” support these transmissions. • 1460 Households – 4244 individuals age 13+ • Mnet subscribers 20 households , DSTV 198 households • Rural Households are not included in the sample.

38. DTT Research challenges

39. RESEARCH TRIAL - CHALLENGES ENCOUNTERED • No DTT Universe. • Signal Coverage Constraints: • The limited coverage of the test signal, further studies needed to test DTT in rural areas • Signal frequencies have been unstable. Households become frustrated some have disconnected their STB as a result. The incidence of this will be measured. • Limitations in Audience Measurement Methodology: • No“metered” panel possible due to time and cost constraints, and a 7 Day Diary method was adopted instead. • DTT Audience measurement must have the capacity to distinguish between analogue and DTT viewership.

40. RESEARCH TRIAL - CHALLENGES ENCOUNTERED • Broadcasting additional channels via DTT, prior to roll-out, is expensive. • Technical Assistance to the Panel is Required • A Call Centre was also established to assist with the installation process. • Controlling Software Upgrades • Stock delivery; ”Swap-Outs” and Stock retrieval • Auditing the Panel • Communication with the panel

41. Dtt Installation research - findings

42. INSTALLATION RESEARCH - PROJECT OVERVIEW • Background • Ease of Installation is a milestone in the DTT Trial • Objectives • Identify factors which inhibit and hinder installation • Audit the research panel (establish which households have been installed, and which have not) • Sample • 1039 Households (74% of Full Panel) with 1089 Installation Attempts • Method • Computer Aided Telephone Interview (CATI) • Field Period • Commenced in March 09 and is ongoing

43. SUCCESSFUL VS UNSUCCESSFUL INSTALLATIONS: (TECHNICAL ANALYSIS) BY MANUFACTURER AND SUBSCRIPTION Surprisingly, there are no correlations between Type (Manufacturer) of STB and installation success. The same holds for Satellite Subscription vs. Non-Subscription. Base: All Installation Attempts (n=1084) By Manufacturer By Subscription (831) (214) (689) (400)

44. SUCCESSFUL VS UNSUCCESSFUL INSTALLATIONS: (DEMOGRAPHIC ANALYSIS) BY AREA Base: All installation Attempts (n=1089) As expected, Durban has the lowest installation success rate. This may be attributed to the “mountainous” terrain which negatively affects signal reception. Success levels in Gauteng, where the terrain is relatively flat, increase significantly when viewed on its own. By Area Gauteng

45. SUCCESSFUL VS UNSUCCESSFUL INSTALLATIONS: (DEMOGRAPHIC ANALYSIS)BY LSM GROUP Incidence of Successful Installation is evenly distributed across all Living Standard Groups. Base: All installation Attempts (n=1089) By LSM Group

46. D.2. Would you describe the installation of this Set-top box as…. to install? Base: All First Successful Installations (n=650) 93% of Successfully Installed households claim that the installation is Very Easy or Somewhat Easy. This suggests that if everything is in working order, installation is a relatively simple task.

47. 17.1. Were any adjustments made to the aerial during installation of the STB?18.1. Did you contact DTT TRIAL ASSIST to make any enquiries about the installation or to assist you with the installation?19. Did any third party/contractor assist you with the installation? Adjustments to aerial (Self and Contractor) Contact DTT TRIAL ASSIST Contractor Assistance (100) (261) (237) (828) (989) (852) (1089) (1089) (1089) Less than a quarter of all installations involved “drastic” or outside intervention. Increased intervention may, of course, result in increased installation success.

48. 17.2. What adjustments were made to the aerial? Base: All installations that required adjustments to aerial (n=237)

49. CONCLUSIONS

50. DTT INSTALLATION - CONCLUSIONS • It should be remembered that this survey is a snapshot in time. Successful installation levels may ultimately be higher – especially after intervention. Interventions include help from professional contractors and DTT Trial Assist. • At first, households were left to “figure-out” installation on their own. Installation levels thus depict what may occur if in reality there is no DTT Migration Communication Strategy. • When everything is in working order, and the signal is available, installation is a relatively easy procedure. • Signal problems occur in mountainous terrain, as shown by Durban’s lower success rate in installation. • Overall, panel members were eager to install and “test” the DTT service.