After a year and a half on the airwaves, all of the digitals are still operating, but penetration is still below forecast, audiences are still small, and a recent CRTC report confirms that the channels are still bleeding money.

As 2002 came to a close, Mario Mota of Ottawa’s Decima Publishing estimates there were about 3.5 million subscribers to digital services in Canada. Mota says there has been a 4% to 5% growth in the digital subscriber base over the last year, and he predicts that by the end of 2003, there will be about four million total.

‘There’s been steady growth,’ says Mota. ‘This bodes well for distributors to sell more channels and helps the diginets to have a larger base to work from.’ However, according to Nielsen Media Research data (as measured from Sept. 2 to Dec. 1, 2002), those subscribing to digital services only spend 6% of their viewing time actually watching the new channels.

The top-rated digital channel among adults 18 to 49, according to the latest Nielsen numbers, is Alliance Atlantis-owned Showcase Action, with an average-minute audience of 4,000 viewers. Rounding out the top-five channels among this age group are SexTV, Scream, Animal Planet and Deja View, the last of which registers an average-minute audience of 1,800.

‘The diginets that have clearly different brands are doing the best, like Showcase Action, Showcase Diva and Lonestar,’ says Sarah Ivey, VP strategic planning at Toronto-based Initiative Media. ‘[But] the diginets don’t have enough audience to do much, unless they have a program that fits with a particular brand opportunity.’

According to figures compiled by the CRTC, the 47 digital channels suffered more than $148 million in losses, while generating revenues of less than $50 million in 2002.

Of the losses, Ivey says, ‘It’s part of a much larger issue. They brought on too much and now are trying to find out what works in the conglomerate and what has to go. Certain brands that aren’t differentiating enough are just going to be shut down.’

However, Ivey says she is using the digitals, especially when it comes to reaching youth. ‘For the youth demo, there’s not a lot of variety on the regular [non-digital] channels,’ she explains.

For instance, recently Ivey arranged a buy for Levi Strauss Canada on MTV Canada. The fit was right, she says, because both are sponsors of World AIDS Day.

‘Levi’s has a very good association with music, so MTV has always been a good match,’ adds Steve Aronovitch, group broadcast director at Initiative. ‘And their audience is growing based on the programming they’ve been getting.’

(A version of this story appeared in the March 10 issue of Strategy Media magazine.) Top 10 Diginets – Adults 18-49
Sept. 2 – Dec. 15, 2002
M-Su 6a-6a AMA (00) Rank
SHOWCASE ACTION 40 1
SEXTV:THE CHANNEL 26 2
SCREAM 23 3
ANIMAL PLANET 21 4
DEJA VIEW 18 5
BBC CANADA 17 6
DISCOVERY CIVILIZATION 17 6
SHOWCASE DIVA 15 8
TV LAND 15 8
COURT TV CANADA 14 10
Source: Nielsen Media Research