SkyDigital takes the lead in race for customers

RUPERT MURDOCH'S SkyDigital has won the opening skirmishes in the long fight to become Britain's dominant digital broadcaster, picking up four times as many users as its rival ONdigital.

According to the latest figures, more than 250,000 British homes are now receiving a digital signal. The satellite broadcaster SkyDigital, which launched on 1 October, says it has hit its year-end target of 200,000 subscribers.

Its terrestrial counterpart, ONdigital, is refusing to discuss figures in public. The company, a joint venture between Carlton and Granada, will say only that hundreds of thousands will be watching by the end of 1999. However, The Independent has learnt that, five weeks after transmission began, as many as 50,000 homes had bought the service, a figure said to be in line with expectations.

SkyDigital launched six weeks before ONdigital. Of the 100,400 customers Sky signed up in its first month, 70,000 or so were existing satellite subscribers trading up to digital. "The big challenge, not just for us, is to get the multi-channel virgin," said SkyDigital.

Over its first three months, Sky has probably seduced about 60,000 multi-channel virgins, a figure that makes ONdigital's 50,000 new users - gained despite hardware supply problems and variable signal reception - look highly respectable.

All you need to watch digital terrestrial television is your existing aerial and television set, with pounds 199 for a set-top box to decode the signal. The shortage of boxes caused ONdigital initial problems. At the launch weekend, shops held 5,000 boxes compared with 75,000 inquiries. "We suffered as new technologies often do," said ONdigital. "That has now been addressed."

The other factor inhibiting ONdigital is that nearly a third of households are in areas unable to pick up the signal. That will fall to about 10 per cent by the end of this year. SkyDigital, however, is available across the whole country to anyone with a satellite dish and the appropriate decoder.

Both platforms offer free to air channels such as BBCs 1, 2, Choice and News 24, and Channels 4 and 5. These are topped up with nearly 200 subscription channels on SkyDigital and about 20 on ONdigital. ITV and ITV2, which commanded an audience of 730 for its Trevor McDonald interview with Sarah Ferguson, are exclusive to the terrestrial platform.

Marco Rimini, director of development and strategy at the advertising agency J Walter Thompson, believes there is little else beyond their big budget promotional campaigns that either supplier could be doing to sell the service at the moment. SkyDigital is expected to spend pounds 60m on marketing before the end of 1999, ONdigital pounds 90m.

"In the short term, the only big difference will come when someone gets some killer programming on air, like football or films," Mr Rimini said. ON-digital has set aside pounds 20m to buy in the sort of must-see, event programming that did so much to drive dish sales for Sky. It has, for example, secured Mike Tyson's return to competitive boxing this month for pounds 2m.

Mr Rimini said he expected a new generation of television sets to include the digital decoder box as standard. Broadcasters could accelerate the government decision to switch off the old analogue signal by heavily subsidising the set-top boxes or giving them away.

The only question left is which of digital's three platforms - cable, satellite and terrestrial - will lead the market. One City media analyst said: "There probably is room in the market for multiple platforms. Cable operators are enjoying reasonable success now and they come on stream this year, while part of the market will never want a dish on the roof."