Bsb vs Sky Television
Analysis: In the 1980’s, existing television sets in Europe were based on PAL or SECAM standards. However, another standard was being developed by Philips and other European companies, HD-MAC. Existing television sets based on PAL or SECAM could not receive HD-MAC transmissions. However, two variants surfaced, D-MAC and D2-MAC, and were compatible with existing television sets and, the forthcoming new television sets based on HD-MAC.
British Satellite Broadcasting: In December 1986, British Satellite Broadcasting won the bid from the British Independent Broadcasting Authority to provide commercial service on three of the five high-powered DBS channels. However, one of the stipulations required by the IPA was that the BSB had to use the untried transmission standard, the D-MAC. BSB business model: To start-up (i.e. program production and acquisition, marketing, satellite depreciation, and etc.), BSB’s initial fixed costs were estimated at 75%-80% of its overall cost structure. In order for D-MAC transmissions to be received, consumers had to purchase satellite dishes that cost £250. In addition to this one-time cost, users of BSB’s programming subscribed for £10 a month. Based upon past patterns of VCRs, “BSB estimated that it would have to install 400,000 dishes by the first year of broadcasting (1990), 2 million by 1992, 6 million by 1995, and 10 million by the year 2001.” Total start-up cost was estimated at £500 million.
Sky Television: Unlike British Satellite Broadcasting’s use of D-MAC, News Corporation’s Sky Television took a different approach and focused on the use of PAL. It chose to broadcast via the higher risk, medium-powered Astra communications satellite. To lease four channels for 10 years would cost Sky Television only £100 million. In order for transmissions to be received, satellite dishes were sold at £249 including installation. News Corporation forecasted that 1 million satellite dishes would be in installed by
British Satellite Broadcasting: In December 1986, British Satellite Broadcasting won the bid from the British Independent Broadcasting Authority to provide commercial service on three of the five high-powered DBS channels. However, one of the stipulations required by the IPA was that the BSB had to use the untried transmission standard, the D-MAC. BSB business model: To start-up (i.e. program production and acquisition, marketing, satellite depreciation, and etc.), BSB’s initial fixed costs were estimated at 75%-80% of its overall cost structure. In order for D-MAC transmissions to be received, consumers had to purchase satellite dishes that cost £250. In addition to this one-time cost, users of BSB’s programming subscribed for £10 a month. Based upon past patterns of VCRs, “BSB estimated that it would have to install 400,000 dishes by the first year of broadcasting (1990), 2 million by 1992, 6 million by 1995, and 10 million by the year 2001.” Total start-up cost was estimated at £500 million.
Sky Television: Unlike British Satellite Broadcasting’s use of D-MAC, News Corporation’s Sky Television took a different approach and focused on the use of PAL. It chose to broadcast via the higher risk, medium-powered Astra communications satellite. To lease four channels for 10 years would cost Sky Television only £100 million. In order for transmissions to be received, satellite dishes were sold at £249 including installation. News Corporation forecasted that 1 million satellite dishes would be in installed by