Too optimistic?

James Murdoch is right in one sense when he says that Freeview is 'no threat' to SkyDigital, since Freeview is currently being marketed as a basic system whereas SkyDigital has the potential to offer a much wider choice of channels if people are willing to pay extra. There's little doubt that some people with Freeview boxes might consider a Sky subscription at a later date, but only if they are convinced of its additional worth.

And BSkyB's better than expected subscriber results for the last quarter of 2004 can be attributed to the fact that there has been no aggressive promotion of the service for the past two or so years, and also ties in with the BBC's current digital TV promotions. There are also areas of the UK where Freeview and cable services are still unavailable and people have lost patience in waiting for these alternatives to become available.

But why has Sky suddenly become interested in HDTV when there are probably cost and capacity advantages to be gained by sticking to standard definition (or SD)? The answer possibly lies in an attempt to defuse the imminent threat posed by the cable TV companies' much-touted "secret weapon", notably true video-on-demand services, though it ought to be remembered that virtually all archive videotape is in SD format.

If Sky can get HDTV to market sooner rather than later, it's likely that enthusiasts may overlook a true VOD service if it only offers standard definition pictures, and the cable companies can't offer HDTV VOD without expensive network upgrades which probably won't materialise for at least ten years. A Freeview HDTV service might be possible after the analogue switchoff but is unlikely to offer more than six or so HD channels.

So HDTV may help to keep many premium package Sky subscribers tied to the platform for the forseeable future, but there are other factors that could help to derail this 'advantage' such as the rental of high definition video discs (Blu-Ray or HD-DVD). Plus BSkyB still seems to have difficulty in providing true premium content above and beyond its specialist areas of sport and movies that isn't provided by other broadcasters.