Seems this issue, as to whether or not News Corp nobbled ITV Digital, by using a subsidiary to decrypt their cards and decoding system, and by doing so affected ITVD's viability, refuses to die.
I love a good conspiracy theory as much as the next person, and there are documented cases of security/encryption companies specifically employing people to try and hack into them to test effectiveness, so it's not at all beyond the realms of possibility that those same people could be put to work to try and hack a competitor's system, but to me the whole argument doesn't stand closer examination.
IIRC the criticisms of On Digital going for SECA Mediaguard started before they even launched, as it had already been successfully hacked a year or so before. Thus the encryption was already fundamentally broken before they even started, with them relying only on their own mods for protection.
Pirating of On Digital was so rife that reportedly 1 in 3 viewers of Sky's premium movie and sport channels on the platform weren't paying for them. Sky also had interests in many of the basic tier channels on the platform too. Whilst a lot of additional revenue for On Digital would have been raised if these were all legitimate subscriptions, it would have done the same for Sky - who would have been at the head of the queue for increased carriage charges. If NDS/Sky were trying to break their encryption system they were just turning revenue away from themselves.
If NDS/Sky really were behind breaking their encryption and distributing gold cards then one wonders why they didn't go all the way and refuse carriage of their channels on the grounds that the security of them can't be guaranteed - with Sky's channels gone On Digital would have lost almost all of their premium channels and a number of their primary channels and would have been brought to their knees a lot quicker than 2002 - it would seem pointless for NDS/Sky to go to all the trouble of breaking them and discrediting them if they weren't going to go all the way and use it as an excuse to pull their channels.
People often look at the lost revenue through piracy of On Digital as if all of those pirates would actually have paid the full subscription if there was no free route available. But how many of them really would? Did the hacking really affect On Digital's revenues that much?
There was also the potential that promoting successful pirating could actually have backfired spectacularly. After all back in 2000 it actually was reality that you could just shell out £80 for a prepaid On Digital box and then buy a £12.99 gold card which unlocked every channel. After a year you just paid another £80 and you carried on. Or alternatively you could get a free box and a minimum subscription (which was only £6.99 / month for a single primary channel) and get the same £12.99 gold card. Either way you were contributing *something* to On Digital, even if nowhere near the market rate - and if you were after Sky Sports and didn't care about the legality then this was massively cheaper than paying a Sky subscription for those channels. So if the pirates really were that big of an element, then you have to wonder why there weren't millions and millions of On Digital prepaid and minimum subscriptions out there which potentially could have made them into a viable company through the sheer volume of them - as well as overtake the headline subscriber numbers which were important at the time.
I think the reality is that piracy was just another sorry chapter in On Digital's history which caused them bad PR but ultimately without the piracy they still would have gone to the wall, their key issues remain around poor reception due to the embryonic DTT transmissions of the time coupled with a business plan which assumed people would pay £200 for a box a lot longer than they actually did.
There was also the potential that promoting successful pirating could actually have backfired spectacularly. After all back in 2000 it actually was reality that you could just shell out £80 for a prepaid On Digital box and then buy a £12.99 gold card which unlocked every channel. After a year you just paid another £80 and you carried on. Or alternatively you could get a free box and a minimum subscription (which was only £6.99 / month for a single primary channel) and get the same £12.99 gold card. Either way you were contributing *something* to On Digital, even if nowhere near the market rate. If the pirates really were that big of an element, then you have to wonder why there weren't millions and millions of On Digital prepaid and minimum subscriptions out there which potentially could have made them into a viable company through the sheer volume of them - as well as overtake the headline subscriber numbers which were important at the time.
I think the reality is that piracy was just another sorry chapter in On Digital's history which caused them bad PR but ultimately without the piracy they still would have gone to the wall, their key issues remain around poor reception due to the embryonic DTT transmissions of the time coupled with a business plan which assumed people would pay £200 for a box a lot longer than they actually did.
That's a very well written piece. I'd never thought about it in those terms.
I think the limitations of DTT compared to Sky, with the latter able to provide a much better service for not much more money really crippled them.
I remember Greg Dyke said in his autobiography that someone he was close to at Sky knew something that was so big and controversial that they said they could never share it with him (or something like that!). I wonder if this was that.
I can't quote cwathen's post (neon bug perhaps) - but in any case, this post is in response to that.
I don't agree that ONdigital would certainly have failed without the support of BSkyB. The big mistake which sent them under in 2002 was that the overpaid for rights which there wasn't much demand for. Perhaps without Sky they would have concentrated on a more basic range of channels at a sub £10 price tag, Worth remembering that the platform didn't have any of Flextech's offerings, at a time when Living[TV] was really growing.
Also worth remembering that Sky made a lot of money from ONdigital for carriage of the few channels the offered, and there was perhaps some sort of commitment from the pre-launch days when BSkyB was a shareholder in the business.
The anecdotal evidence I have in front of me suggests that the people who had gold cards did pay Sky or NTL following the demise of the platform. Similarly, the handful of people I knew with 'chipped' NTL boxes did end up shelling out following VM successfully killing them. I appreciate this is only anecdotal evidence, but I think there's a much stronger correlation between 'would otherwise pay' than there is with, say, illegally downloaded music; crucially you had to go out and get specific kit to bypass TV encryption, whereas in the case of the latter you needed only a computer plus internet connection.
I might be wrong with this - but I think prepaid boxes were the customer's to keep (after somebody challenged the legitimacy of selling equipment which would not actually belong to the customer).
I can't quote cwathen's post (neon bug perhaps) - but in any case, this post is in response to that.
I don't agree that ONdigital would certainly have failed without the support of BSkyB. The big mistake which sent them under in 2002 was that the overpaid for rights which there wasn't much demand for. Perhaps without Sky they would have concentrated on a more basic range of channels at a sub £10 price tag, Worth remembering that the platform didn't have any of Flextech's offerings, at a time when Living[TV] was really growing.
I think the rebranding and the ITV Sport Channel fiasco was more the straw that broke the camel's back than anything else. It's not like they were stable until that point, and indeed going down the route they did was motivated solely because the business was fast becoming unviable. On Digital's subscriber numbers had peaked in early 2001, after that the churn rate got so high that from then on until the end they were always losing customers quicker than they could add them and trying to cash in on the ITV brand name and launch a premium sports channel was an act of utter desperation, a last ditch attempt to save the business and not a road they would ever have gone down if they didn't already have their backs against the wall.
As for concentrating on a sub-£10 lineup of basic channels without Sky - you mean a la Top Up TV? That kind of business model worked for Top Up because they were only ever resellers of existing content and didn't have the kind of overheads or need the kind of subscribers numbers which On Digital did. On Digital had positioned themselves as the main competitor to Sky - a more serious threat than the cable companies of the day and had invested in a business which needed to deliver big returns in order to be viable. Knocking out UK Gold and Granada Plus for a tenner a month to a few hundred thousand people was never going to make the business pay.
WillPS posted:
Also worth remembering that Sky made a lot of money from ONdigital for carriage of the few channels the offered, and there was perhaps some sort of commitment from the pre-launch days when BSkyB was a shareholder in the business.
As I said myself, this only adds to the argument against NDS/Sky actively pursuing a break of On Digital's encryption - the most lucrative channels which people got gold cards for were operated by Sky. Therefore they'd be effectively doing themselves out of money if they were facilitating piracy on the platform.
WillPS posted:
The anecdotal evidence I have in front of me suggests that the people who had gold cards did pay Sky or NTL following the demise of the platform. Similarly, the handful of people I knew with 'chipped' NTL boxes did end up shelling out following VM successfully killing them. I appreciate this is only anecdotal evidence, but I think there's a much stronger correlation between 'would otherwise pay' than there is with, say, illegally downloaded music; crucially you had to go out and get specific kit to bypass TV encryption, whereas in the case of the latter you needed only a computer plus internet connection.
Well here's my anecdotal evidence - I was one of the scum who had a gold card for On Digital. In my defence I was 17 at the time and didn't think beyond the fact that I could get free movies and free porn whilst impressing my mates with having Sky Sports in my bedroom. I used it to 'upgrade' my prepaid subscription (which was 6 primary channels). When that avenue was closed off I did not go on to subscribe to any of those channels, nor have I ever done so.
WillPS posted:
I might be wrong with this - but I think prepaid boxes were the customer's to keep (after somebody challenged the legitimacy of selling equipment which would not actually belong to the customer).
Definitely not - when you bought a prepaid package you were actually paying for the a year's viewing of 6 primary channels and not for any equipment. The box was provided on free rental to enable you to make use of the viewing for which you have paid. You were not actually paying for the equipment itself and On Digital continued to own it. In practice of course since there was no contract being signed you also didn't have to prove who you were or where you lived and so once a prepaid box was in someone's hands there was very little chance of On Digital ever getting it back again. With an actual subscription the situation may have been slightly different. What eventually happened to them is Carlton & Granada bought them from the administrator and then gave them away to the ex-subscribers. This little publicity stunt also came with them getting a big rebate on their ITV licences by the act being viewed as converting a couple of million homes to digital!
Dunno where I got the idea about Prepaid boxes from. Perhaps I was confused by the discussion at the time that the administrator's had the cheek to ask them to return their boxes when they had not received anything/much by way of a refund for the services they had prepaid for.
Quote:
Well here's my anecdotal evidence - I was one of the scum who had a gold card for On Digital. In my defence I was 17 at the time and didn't think beyond the fact that I could get free movies and free porn whilst impressing my mates with having Sky Sports in my bedroom. I used it to 'upgrade' my prepaid subscription (which was 6 primary channels). When that avenue was closed off I did not go on to subscribe to any of those channels, nor have I ever done so.
Fair enough, I'd not call you scummy for doing so, as I said plenty of my friends did the same, and I would have done so too if I had a box of my own. The only people I'd describe as 'scummy' for doing this kind of thing were the people who used cloned NTL modems which absolutely crippled somebody else's connection.
Quote:
As for concentrating on a sub-£10 lineup of basic channels without Sky - you mean a la Top Up TV? That kind of business model worked for Top Up because they were only ever resellers of existing content and didn't have the kind of overheads or need the kind of subscribers numbers which On Digital did. On Digital had positioned themselves as the main competitor to Sky - a more serious threat than the cable companies of the day and had invested in a business which needed to deliver big returns in order to be viable. Knocking out UK Gold and Granada Plus for a tenner a month to a few hundred thousand people was never going to make the business pay.
That business model didn't work for Top Up TV at all! They got lucky by being in the right place at the right time (occupying several DTT slots which rocketed in value). As far as I'm aware the original 'linear' Top Up TV offering never even broke even, it wasn't until Setanta showed up that they managed to fix that.
What I'm suggesting is that if On Digital HAD NOT positioned themselves as a rival to Sky, but rather an affordable way to go digital and have 10-12 extra channels (perhaps 15-18 if you include time shares) it would have been a more compelling offer. As it was, they initially tried to offer something broadly similar to what Sky Analogue offered at a time when Sky were leaving that for dust. When the initial offer stuggled to gain pace they made a pretty mad gamble with exclusive premium content (which, it turned out, nobody was willing to pay for).
I suspect that Sky could see ONdigital/ITV Digital was doomed anyway, so I think it's unlikely they would have wasted much energy on assisting the hacking of their encryption system. After all, they would only be reducing what little revenue they were getting from the platform.
I also don't think Sky would've pulled their channels to hasten the demise of ITV Digital either. The publicity would be damaging as they would be seen as anti-competitive. Surely it was better for Sky to sit back, wait for the doomed business model to fail, and then ride in as one of the 'saviours of DTT' as part of the Freeview consortium.
You can point to heaps of problems with On Digital. Piracy was rampant but so to was analogue cable piracy in many areas of the UK. I suspect it didn't help that the firm effectively gave away boxes for next to nowt through the pre-paid programme, expecting people to eventually sign up to a subscription, while they were actually used as a source of boxes for gold cards.
But the channel selection was lousy, the signal and picture were bad compared to modern DTT and the overall experience was crippled compared to Sky and digital cable. Something could have been salvaged from all that I'm sure - Top Up TV didn't waste much time in converting the old OND boxes to SECA 2 - but banking the entire future of a platform on a misguided belief that viewers would flock to watch lower league football was so spectacularly desperate and stupid that OND did it for itself, in the end.
I guess that the UK's digital terrestrial television has been improved since then. Time flies. (Although, not being British, I don't know if Freeview is better than Sky, Virgin or IPTVs there.)
