DVB CN, 7/13/11
On July 12, Shaanxi Broadcast & TV Network Intermediary and consumer electronics manufacturer Skyworth Digital Holdings (0751.HK) held a signing ceremony in Xi'an for a partnership that will promote Skyworth's all-in-one bi-directional digital TV sets and Shaanxi Broadcast & TV's bi-directional HD cable DTV service to the operator's more than 5 mln subscribers.
A spokesperson for Shaanxi Broadcast & TV said that the operator had invested several hundred million RMB in the nearly-completed bi-directional conversion process, but that to date only a few thousand subscribers had signed up for its HD service. The reason, the spokesperson said, was subscribers' inability to accept the RMB 1,500 charge for each digital STB, even when paired with subscription plan discounts.
Skyworth Digital Group VP Yang Dongwen said that with the exception of cities like Beijing, where operators rely on government subsidies for HD DTV, operators in most areas are hesitant about HD DTV owing to high marketing costs and uncertain profit potential. Providing free HD STBs to its 5 mln-person subscriber base, for instance, would mean costs of RMB 5 bln for Shaanxi Broadcast & TV -- unfeasible given the operator's RMB 1.22 bln revenues in 2010.
A spokesperson for TV ad agency and media service firm China Television Media (600088.SH) said that "essentially all" of China's 100-odd premium channels currently operate at a loss, adding that since much interactive and on-demand programming is currently provided free with subscriptions, the potential for bi-directional HD DTV to become profitable remains uncertain.
All-in-one televisions will allow network operators to promote their services without having to provide free STBs, Yang said. As different provincial network operators use different CA (conditional access) encoding, Skyworth will have to work with each operator on an individual basis. To this end, the company is first working with cable network operators who have finished consolidating provincial networks.