Kanal Official Faces Decision on Bringing HD to Viewers in Sweden

Kanal 5 and Kanal 9 are two of the biggest commercial FTA TV channels in Sweden.

Kanal 5, broadcast out of the United Kingdom, targets an audience between 15-44 years of age and reaches 87 percent of the Swedish population via satellite distribution. Kanal 9, also broadcast out of the United Kingdom and distributed primarily via satellite, targets viewers between the ages of 30 and 59 and reaches 58 percent in Sweden.

Sweden, with a a population of around 9 million people, is one of the few markets in Europe where there has been strong DTH competition throughout the last few years, and one of the big challenges facing Kanal 5 and Kanal 9 managing director Jonas Sjögren is when to launch the channels in HD.

Via Satellite caught up with Sjögren in French Guiana at the recent NSS-12 and Thor 6 launch to talk about the growth plans for Kanal 5 and Kanal 9. 

Via Satellite: When do you expect to launch HD channels in Sweden?

Sjögren: The main parts of our program schedule could be shot in HD today. It is technically possible. We are a commercial broadcaster, so the challenge for us is to deliver high profits. So there needs to be a commercial incentive for us to build this. There are extra costs involving capacity as well as extra costs involving materials. We need to have commercial as well as technical reasons to move to HD. Today, the number of HD channels in Sweden is not very high. I think the demand will pick-up once there are more HD-ready TV sets in TV households. It is up to the retailers to really push this. 

Via Satellite: How far are we away from a comprehensive HD offer from Kanal in Sweden?

Sjögren: I think within a year we will be launching HD channels. In 12 months time, I expect to have around two HD channels, and these will be existing brands. We have already had discussions with Telenor, and we have secured a lot of content in HD already. We need to find that commercial reason. The consumers still need HD-ready set-top boxes, but there is also a need to produce channels in both SD and HD. 

Via Satellite: What are Kanal 5 and Kanal 9’s demands for satellite capacity?

Sjögren: 1 degree West is our main spot, and we will continue to remain at the spot at the future. We will have a need in the future for more capacity just for SD broadcasts. Our capacity needs will also go up when we start to launch HD channels. 

Via Satellite: Will you have to cooperate more with other broadcasters, even traditional rivals, in order to push HD in Sweden?

Sjögren: In the beginning, when Sweden transformed from analog to digital, customers were reluctant to make the initial move to digital. After a while, they saw the difference on screen, and secondly, you almost need to force people gently to move to digital. But yes, the broadcast industry definitely needs to work together in an intelligent way to push HD. Sofor example, if you are running an SD channel also in HD, you could have a ticker at the bottom of the SD channel to make people aware that the channel is also running in HD. 

Via Satellite: What is the biggest challenge in being an HD leader?

Sjögren: We don’t want to be a technical leader in terms of providing HD services if that means reducing profitability. Of course, it would be nice to be a leader, but I don’t want us losing money on HD. To build profits from HD channels, we need to work together with the satellite operators. In Sweden, Canal Digital is the only one stating they have HD. They have superior capacity compared to cable and DTT. Canal Digital wants to be an HD leader among pay-TV operators in the region. 

Via Satellite: Could you tell us about your plans in terms of making content available on more platforms?

Sjögren: We already have player available on the Web. We have all our local Swedish content on this. We have launched some U.S. series on this. The challenge again is for us to try and find the right business model. We want to be at the forefront, but we need to make money on this. So pure online distribution is a tough environment. The young Swedish audience wants this content for free. They are not yet willing to pay for content online. With U.S. series we currently have, we are trying out pay models. We are trying out and testing different business models.

I still strong believe in subscription models and working with satellite pay-TV operators. When a customer has a relationship with a pay-TV operator, it is easier to add to subscription charges as well as content to the library. I think you can convince the consumer about the value. We need to work together with satellite pay-TV operators and other broadcaster when we are trying to sell more value. I believe simplicity is key here. Customers are used to paying to satellite operators rather than channels, so we should help the operator expand with new services and channels. 

VIA SATELLITE: We saw the Ukraine-England soccer game recently streamed live over the Internet, bypassing cable and satellite platforms. How do you view the potential impact of streaming technologies?

Sjögren: Short term, it could be tempting for a TV channel to only screen content via the Internet, but we have such long-term established relationships with satellite pay-TV operators that I don’t believe in trying to compete more with them. Online is growing rapidly, but around 95 percent of our content is still consumed via a set-top box. I don’t want to bite the hand that feeds us. TV is still a mass medium. I think it makes sense to still work with operators. You had someone like Joost, who were basically a screening portal, but their model did not work for us. They wanted us to give away so much content and advertising revenues, so in the end, we did not join that platform. 

Via Satellite: What benefits do you derive from being part of the ProSieben.Sat.1 Group?

Sjögren: First of all, if you look at Group acquisitions in terms of content and if you look at the ProSieben.Sat.1 Group all over Europe, we are very power of buyer of content, say with Hollywood Studios for example. That is a clear advantage. Secondly, we try to work as much as we can best practice in terms of sharing ideas. We look for the best ideas and then see how they can potentially travel to other territories throughout the Group. Thirdly, if you look at the Nordic countries, we can share the studio sets as in other countries. We can make expensive shows, but split costs among different channels. We have other channel brands in the Nordic region. 

Via Satellite: Do you have an advantage in terms of buying power compared to other Swedish FTA channels?

Sjögren: I would say so. I would also say working with Telenor is also a benefit. It is not just about buying power, but we feel like we have good partners in the region. Both Kanal 5 and Kanal 9 are based on Telenor satellite capacity. One clear advantage for advertisers is that big international advertisers that see the Nordic not as one region but as one country. It is a benefit to them that we can offer them a solution for channels throughout the Nordic region and not just our channels in Sweden. Kanal 5 and Kanal 9 have similar brands in Norway, Finland and Denmark. In Norway, it is called TV Norway, but it is similar in profile to Kanal 5. We share a lot of competencies among the channels. 

Via Satellite: Have you seen an advertising slow down with Kanal 5 or Kanal 9 this year in Sweden?

Sjögren: Kanal 9 is a relatively new channel. It is only two-and-a-half-years old, so it is going through a very rapid growth phase. So most of the advertising is sold pit. If you look at more established channels such as Kanal 5, we see the same challenges as the rest of Europe. The slowdown here is around 14 percent to 16 percent of advertising revenues in 2009. However, we are seeing that the TV advertising market is performing better than other media in Sweden like print. Even though there is a slowdown in advertising, TV is gaining market share in terms of other media when it comes to advertising. 

Via Satellite: What do you see as the major challenges over the next 12 months?

Sjögren: It is important to find new revenue streams. Non-linear viewing is growing. We need to find the right business models to earn money on that as well. It could be very tempting to be a technology leader, but you risk bringing in the wrong business models. If you give away something for free, it will then be harder to start charging for it. So, I want to spend more time with the satellite operators to find out what services the consumers really want and these new price points. So a key challenge is to make money out of non-linear viewing.