About us. Contents. Overview. TV Trends. The Big Numbers. Evolving Freeview. 700MHz Clearance. Working with Digital UK. Digital UK Update: 2018

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1 Update: 2018

2 Digital UK Update: About us Digital UK leads development of Freeview, the nation's most widely used television platform. Our goal is to create the best free TV service, both live and on-demand. We work with world-leading companies to deliver television which informs, educates and entertains, ensuring every home in the UK can access high-quality television without the need for a monthly subscription. Our latest innovation is Freeview Play which brings terrestrial TV, catch-up and on-demand together in a new generation of televisions and set-top boxes, making it easier than ever for viewers to watch what they want, when they want. Partnerships are crucial to what we do. We collaborate with a broad range of organisations in pursuit of our goals and are owned by Arqiva, the BBC, Channel 4 and ITV. Contents 03 Overview 06 TV Trends 08 The Big Numbers 09 Evolving Freeview MHz Clearance 14 Working with Digital UK Publication date: June 2018

3 Digital UK Update: Overview Chair's report - Caroline Thomson Digital UK leads development of digital terrestrial television (DTT) the UK s most popular TV service. Together with Freeview and a range of industry partners we have launched Freeview Play, the next generation of TVs and boxes that let viewers switch seamlessly between live TV, catch-up and on-demand programming. We are also responsible for day-to-day operational management of DTT, including the Freeview onscreen programme guide, and operate the Freeview Advice Line.

4 Digital UK Update: Overview Chief Executive's report - Jonathan Thompson Prepared for change It s been another tumultuous year for the media, with truth and trust called into question and the influence of social media and the internet placed firmly in the political spotlight. Free-to-view public service broadcasting, with its core values of independence, accountability and universal access, feels more important than ever. Against this backdrop, the new five-year funding agreement for Digital UK and our sister company Freeview, takes on additional significance. It s hugely encouraging to see the key players in digital terrestrial TV (DTT) Arqiva, the BBC, Channel 4 and ITV coming together to support our ambitious plans for the future of free-to-view TV. We have good reasons to be optimistic about the future. Unlike most other established platforms which are struggling to maintain their share of the market and in some cases shrinking, the number of homes watching Freeview is growing. We are also boosting our channel line-up and investing in Freeview Play which offers an expanding menu of catch-up and streamed content, including events such as this summer s Wimbledon in Ultra HD via the BBC iplayer. But there s no question that we face significant challenges. The giants of Silicon Valley are aggressively targeting TV, traditional business models are being disrupted and viewing habits are changing. So how do we make sure that free-to-view TV will continue to thrive? Collaboration is key. We need to work together and focus on our strengths. We also need to take some lessons from the competition, becoming smarter in our use of technology and data. Most importantly, we must give viewers what they have come to expect a wide choice of quality content, available whenever they want. Digital UK has a central role to play in bringing together our stakeholders and partners to rise to the challenges ahead. Now more than ever, we need to articulate a clear vision of Freeview's role in the future of UK television and the government policies which will be needed to safeguard its future. In doing so we can achieve our goal of delivering the world s best free TV service easily accessible and available to all, with high-quality British programming front and centre. I would like to thank everyone at Digital UK for their dedication and hard work throughout the year. My thanks also go to our many partner organisations and, of course, to our chair, Caroline Thomson, and all the members of the Digital UK board.

5 Digital UK Update: Overview Key achievements Success of Freeview Play Summer 2018 looks set to see four million Freeview Play TVs and set-top boxes sold since launch. With support from mass-market brands including Sony, Panasonic, LG and Toshiba, Freeview Play is fast becoming the UK standard for connected TV. The past year has seen the addition of a number of new features and paved the way for a further wave of developments, including a mobile app, in the months ahead. Freeview upgrades While Freeview Play is a key area of focus, maintaining and improving the core Freeview service remains a priority. This year, yet more channels have been added to the line-up, extending the breadth of content on offer. The electronic programme guide (EPG) has been reorganised accordingly, also making room for future channel launches. Behind the scenes, the centralised service information (CSI) system that powers Freeview s EPG has been completely redesigned. This significant investment in the platform ensures that Freeview will continue to serve the needs of broadcasters as well as viewers. 700MHz clearance is on track The large-scale programme to reallocate some of the airwaves used by Freeview continues. We ve been working closely with all the organisations involved to coordinate the engineering work and provide assistance to viewers. It s a complex and challenging project but we re confident of delivering on our responsibilities. Above all, we re committed to minimising disruption for viewers who need to retune their TVs and boxes by making sure that information and support are readily available. New partnerships The theme running through all of these achievements is partnership. It s at the heart of everything we do and we re delighted to say that, this year, our partner network has grown. We ve put a lot of energy into fostering new and deeper links with channel providers, TV manufacturers and retailers as the basis for our future growth. Developing Digital UK We ve also grown as a company, in line with our ever-evolving role and increased ambition to deliver the world's best free TV service. We ve focused on nurturing new and existing talent, expanding our technological capabilities and providing experience for apprentice BBC engineers. Most importantly, Digital UK remains a great place to work, with the right culture to bring out the best in everyone.

6 Digital UK Update: TV trends Understanding the changing landscape of UK TV The key trends that have shaped the past year are familiar ones. More TV is being watched via the internet, while global players such as Netflix and Amazon continue to grow in both audience share and ambition. Tied to this is the continuing rise of 'cord-cutting', as more and more viewers swap multichannel pay-tv packages for a pick-and-mix approach, combining Freeview with low-cost, subscription video on-demand (SVOD) services. This in part helps explain why Freeview is the only major broadcast platform which is growing its viewer base, with nearly a million extra households coming on board since Percentage change by major platform (Q Q1 2018): 7% 0% 4% 4% DTT Virgin Sky Free Satellite Average weekly viewing minutes (live and time-shifted) to DTT versus all devices*: Minutes per week Q Q DTT devices All devices Viewing to EastEnders on BBC One by platform: DTT proportion 43% 47% * Figures exclude unmatched viewing DTT Digital satellite Cable Other Source: BARB

7 Digital UK Update: TV trends Profound change It s clear that a seismic shift in the way TV is delivered and consumed is not only inevitable it has already begun and will not be reversed. So far, we re in the early stages of this transformation. While internet viewing overall accounts for only a small proportion of TV watching, it is growing among younger viewers in particular. Change is coming and free-to-view TV must find a way to adapt. Healthy competition Though unsettling, disruption to the status quo is no bad thing, driving innovation, encouraging competition and increasing choice. Netflix and Amazon are good for TV, offering more choice to those willing to subscribe. The challenge for free-to-view TV is to compete with these players who are operating at global scale with production budgets which dwarf those of national broadcasters. This means UK programme makers must raise their game, be willing to take risks and concentrate on producing high-quality programmes which resonate with UK audiences. Frictionless experience In this respect, there s a fourth trend that is perhaps more important. Namely, viewers are becoming more savvy and sophisticated. While the desire for more independence and better value-for-money has fuelled the drive towards cord-cutting, there s also an increasingly low tolerance for technological shortcomings and inflexibility. Viewers want a frictionless experience. This is broadcast TV s great strength, offering a service that is simple to use and instantly available. It can be Freeview Play s great strength too. Freeview Play has evolved to embrace the things viewers have come to expect, offering a wealth of on-demand programming with recommendations and search functionality to enable new content discovery. Crucially, these features are built into a platform centred around public service broadcasting and free-to-view TV, with the technological flexibility to be ready for the continuing shifts in viewer behaviour in the years ahead. On the delivery side, we must be willing to follow the changing habits and demands of viewers by finding new ways to help them navigate the ever-expanding range of programmes we offer, both live and ondemand.

8 Digital UK Update: The big numbers DTT 47% of TV viewing is via DTT sets 7% growth of DTT homes since channels available on Freeview Freeview Play 19 TV brands 3.5m total sales 200+ products 700MHz clearance 100+ television transmitters re-engineered 12m households provided with information 500k web visitors supported online Figures from 12 months to 31 March 18

9 Digital UK Update: Evolving Freeview Working to enhance the Freeview platform With live and catch-up TV accessible from the same electronic programme guide (EPG), Freeview Play makes it easy for everyone to enjoy the benefits of connected TV. The past year has seen Freeview Play established as a mainstream service with widespread support from manufacturers. Our focus has now shifted from the initial launch phase to enhancing Freeview Play, both as a service for viewers and a platform for broadcasters. More content The number of channels available via Freeview and Freeview Play continues to grow. New channel launches have increased not only the quantity but also the breadth of content on offer. Since the start of 2017, 12 new channels have been added, including PBS America, carrying high-quality factual programming, and Freeview s first dedicated sports channels FreeSports and Sports Channel Network. Improving discovery Making it easy for viewers to access our channel partners content is what Freeview Play is all about. This year, aiding content discovery has been a major focus. Significant investment in developing the platform s metadata delivery system (MDS) has allowed Freeview Play to display richer information about both live and on-demand content. We ve also introduced enhanced search functionality, meaning it s now possible to search everything available on demand from the BBC, ITV, Channel 4, Channel 5 and UKTV around 17,000 programmes in total all in one place. Meanwhile, Freeview Channel 100 has been transformed, seamlessly integrating the on-demand experience as part of the linear channel line-up. From Channel 100, Freeview Play viewers can access all the on-demand apps, search everything and browse through a curated selection of programme recommendations designed to highlight new and notable content. Freeview Channel 100 has been transformed, seamlessly integrating the on-demand experience with the linear channel line-up

10 Digital UK Update: Evolving Freeview More choice for consumers Sony, Sharp, Philips and TCL have joined the long list of manufacturers offering Freeview Play devices. Sony s decision is particularly significant as it means that 19 out of the top 20 UK television brands are now producing Freeview Play devices. The support of these manufacturers who together account for close to 60 per cent of the UK market means consumers can choose from a wide array of devices at different price points. They all benefit from the recognisable Freeview Play brand and offer the same comprehensive selection of on-demand players. This summer an estimated four million new Freeview Play TVs and boxes will have been sold since launch. A key consideration for manufacturers is the ability to differentiate their products. We continue to develop Freeview Play as a platform that supports their desire to innovate and add value. This year s MDS enhancements have enabled a range of richer features, including Sony s new-look, image-based EPG and Panasonic s Quick Look Guide, which lets viewers scroll through live TV, catch-up content and on-demand recommendations all on one screen. The future We have ambitious plans for the future of Freeview Play. This summer saw viewers able to watch the World Cup and Wimbledon in stunning clarity with Ultra HD (UHD) pictures as part of an ongoing BBC iplayer trial. Later this year we will also launch a mobile app that will allow viewers live and ondemand content on their smartphones and tablets. Restart functionality is also planned, giving viewers switching on half-way through a programme the option to start again from the beginning, directly from the EPG. We have already been supporting the BBC in rolling out this feature and expect to see it spread to other channels soon.

11 Digital UK Update: Evolving Freeview Supporting innovation Every year, we work with a growing number of global manufacturers who want to build Freeview Play into their TVs and set-top boxes. Our processes are designed to fit with the annual TV production cycle as new features and functionality are added. 1 We share the latest Freeview Play specifications with TV manufacturers 2 We release Freeview Play test materials to help manufacturers design their products 3 TV manufacturers develop their updated TVs and set-top boxes 4 We work with manufacturers to test and approve their products 5 One approved, we issue a Freeview Play conformance certificate 6 The certified devices are shipped to retail outlets around the UK for sale

12 Digital UK Update: MHz Clearance Freeing up the spectrum Progress report This year, the 700MHz Clearance Programme entered its most technically demanding and complex phase so far. In the first quarter of 2018 alone, more than 10 million households across north west, central and southern England went through clearance, including four large-scale events each affecting in excess of one million households. We re pleased to report that the programme is proceeding well with good levels of viewer awareness and giving positive feedback through research we've carried out immediately following some larger events. Thanks to close collaboration with a large number of partners, we are on track to complete the project on time in What is 700MHz clearance? In 2014, Ofcom announced the decision to reallocate part of the frequency spectrum used by digital terrestrial TV, freeing up the 700MHz band for mobile data. Engineering work on transmitter sites across the UK is being carried out in a series of staged clearance events set to run until Following a clearance event, the majority of affected households will simply need to retune their TV equipment. A smaller number will need their aerial repositioned or replaced. This major infrastructure project represents the biggest change to the terrestrial TV network since digital switchover. Digital UK is working with Government, Ofcom, broadcasters, DTT network operator Arqiva and our consumer support partner, Digital Mobile Spectrum Ltd, to help co-ordinate the changes and provide support for viewers. This major infrastructure project represents the biggest change to the terrestrial TV network since digital switchover Right: Arqiva is leading the programme of engineering work for clearance, including the construction of a temporary mast at Emley Moor in West Yorkshire

13 Digital UK Update: MHz Clearance Freeing up the spectrum Minimising disruption One of our key goals is to minimise disruption to Freeview and its viewers. Key to achieving this is ensuring viewers and channels are aware of what is happening and able to access information or practical help should they need it. The first half of 2018 was one of the most challenging periods of the programme as our planning and operational teams geared up for a rapid sequence of large-scale events. While this inevitably stretched our consumer support staff, it was also a valuable opportunity to learn and make improvements for the remainder of the programme. We ve worked hard to raise awareness of the need to retune, adapting our viewer communications strategy and sharing more information and guidance with channel providers, enabling them to play a more active role in boosting consumer awareness. Supporting viewers While it s still relatively early days in the clearance programme, evidence to date suggests that most viewers are able to retune their TV equipment with little or no help. The vast majority of people looking for information have found it online, with more than half a million visits to dedicated pages on the Freeview website during the first quarter of Our research suggests that typically around threequarters of viewers are aware of the changes ahead of them taking place. Calls to the Freeview Advice Line and cases requiring in-home support have been lower overall than forecast. Fielding in excess of 30,000 calls in the first quarter of 2018, the Advice Line team have adapted well to the large spikes in demand around each clearance event, developing a flexible approach to keep waiting times to a minimum, while also offering advice through social media channels such as Facebook and Twitter. The in-home support teams operated by our partner, DMSL, made more than 2,800 visits during the first three months of the year, exceeding their target of restoring main channel service to all homes within 10 days of call-out and within three days for priority cases.

14 Digital UK Update: Working with Digital UK Promoting collaboration across the UK TV industry From the start, the UK s digital terrestrial TV service has been built on industry-wide collaboration. It was the coming together of public service broadcasters, commercial operators, manufacturers and retailers that made the launch and subsequent success of Freeview possible. This same spirit of collaboration is part of Digital UK s DNA and we pride ourselves on being a great partner to work with. Over time, our network has grown to become truly global, from major TV manufacturers to international content providers. We have grown too, evolving to meet the technical demands of developing Freeview into a fully hybrid platform and undertaking major projects such as the 700MHz Clearance Programme. Investing in our people Though we remain a small company of around 50 people, our modest size means we can be agile in responding to the profound changes sweeping the television sector and our own ever-evolving role. We re also active in developing the Digital UK team. Through individual training and development plans, we look to help everyone who works at Digital UK to grow in their role and learn new skills. We also take part in the BBC s apprenticeship scheme, regularly providing hands-on secondments to technical trainees. In our most recent company survey, staff scored our collaborative culture as the highest ranked factor in making Digital UK a good place to work. Growing our network The launch of Freeview Play, and the exciting strides it has made in the last 12 months, have served to expand and strengthen our network of partners. In particular, we ve worked hard to develop closer working relationships with new and existing content providers as we continue to develop Freeview Play. We continue to have a strong relationship with the DTG, which sets the standards for terrestrial broadcasting in the UK, and our role in developing the technical specifications for Freeview Play has seen us increasingly involved in supporting manufacturers as they bring of new products to market. We work closely with consumer electronics partners in the UK, Europe and Asia, and regularly host teams of engineers at our offices, assisting the development of new features and helping to test their latest products. We work closely with consumer electronics partners in the UK, Europe and Asia, assisting the development of new features and testing products Right: Digital UK s Graham Bull working with software developer Lu Yao Wen on the latest Sharp TVs featuring Freeview Play

15 Digital UK Update: Working with Digital UK Alongside technology, communication remains a key focus, from engaging with policy makers and regulators to sharing news with industry about platform developments. As part of this work, we host industry events in which we bring together key players from the world of television to debate topical issues and to share ideas. In November 2017, we staged a morning conference for around 200 guests at BAFTA with speakers including Sir Peter Bazalgette, Chairman of ITV, Kenton Allen, CEO of Big Talk Pictures and Adil Ray, writer and actor in shows including BBC One's Citizen Khan and Ackley Bridge on Channel 4. The power of partnership As a small company we rely on fostering strong partnerships to achieve our goals. The 700MHz Clearance Programme is in many ways the perfect illustration of why this is important. Coordinating this major change programme means bringing together a broad range of organisations, from policy makers and regulators to the multiplex operators, channel providers and wider industry stakeholders. Our ability to align and coordinate these disparate groups in a shared endeavour is critical to the overall success of the programme. Similarly, our role in launching Freeview Play as a new technology standard for UK television has spanned the worlds of international standards, software development, R&D, consumer electronics manufacturing and retail. We've enabled and supported innovation in each of these fields, creating commercial opportunities for companies large and small and in doing so enhanced consumer choice. That same ethos underpins the new funding deal agreed by Digital UK's shareholders. It means we can continue to bring people and organisations together for the wider benefit of UK television. It's also a great example of how major players in broadcasting are increasingly collaborating to create new and exciting opportunities, not just for Digital UK but also our many industry partners. It's a boost to our ambitions to make Freeview even bigger and better and a potent reminder that the spirit of collaboration on which Freeview was founded is stronger than ever and serving the interests of UK viewers. We host industry events in which we bring together key players from the world of television to debate topical issues and to share ideas Right: Writer and actor Adil Ray in conversation with journalist Cathy Newman at our Outside the Box event at BAFTA

16 Digital UK 27 Mortimer Street London W1T 3JF digitaluk.co.uk Digital UK is owned and funded by the BBC, ITV, Channel 4 and Arqiva. The company is limited by guarantee. Each member bears an equal share of the central costs of Digital UK s DTT platform operations, which include viewer support, communication and staff and office costs. In general, multiplex-specific costs related to network management and platform support are split six ways between the members according to the number of national multiplexes they operate. A subsidiary company, Digital UK Trading Limited, has now been incorporated to manage revenues and costs relating to Freeview Play. Digital UK Trading Limited is a company limited by shares. The shares are 100 per cent owned by Digital UK Limited. Digital UK works closely with Freeview. The brands Freeview and Freeview Play are owned by DTV Services Limited.

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