Germans Prove Willing To Pay for HD Satellite Service

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PARIS — Satellite fleet operator SES expects its HD Plus service, which provides German free-to-air satellite customers with high-definition television for a monthly fee, will surpass the 1-million-subscriber mark by the end of 2012, SES announced Nov. 24.

Two years after the first HD Plus customers took delivery of their receivers and smart cards, and one year after these early adopters were faced with the choice of being disconnected or paying an annual fee, 63 percent have agreed to the annual payment, SES said.

HD Plus provides about a dozen commercial-free HDTV channels that would not otherwise be available to SES customers in Germany.

The service is free for the first 12 months, after which subscribers pay a fee of 50 euros ($68) per year or are disconnected.

SES spokesman Markus Payer, while conceding that no system is likely 100 percent piracy free, said Nov. 25 that it is not easy to cheat the system, and that the most obvious ways to do so would end up costing more than the 50-euro charge.

SES ordered more than 2 million HD Plus smart cards from manufacturers before the service’s debut in November 2009. The service now reaches 1.9 million German homes, a figure that includes those whose who did not begin the service until a few months ago and are thus still in their free-trial period.

But 305,000 households — 63 percent of subscribers signing up between November 2009 and Oct. 31, 2010 – have converted to the paid service.

That leaves nearly 1.6 million other HD Plus users now on the system whose subscriptions will end in the next 12 months unless they agree to the fee. SES’s current thinking is that the 63 percent renewal rate will hold, in which case HD Plus will count more than 1 million subscribers by the end of 2012 even if the current paid customers do not renew.

“The conversion rate of 63 percent from the free-trial period into a paying mode remains as high as in the starting period and thus significantly exceeds our expectations,” HD Plus Chief Executive Wilfried Urner said in a Nov. 24 statement. “The high rate of acceptance began as a result of early adopters, and now indicates that HD Plus passes the test as a product for the mass market.”

At the time of its inauguration, HD Plus was considered important for two reasons.

First, the German market has traditionally resisted paid television services but has, like other Western nations, largely converted to large, flat-screen televisions.

Second, Germany is SES’s most profitable national market but one that will become more difficult when a German government-ordered shutoff of analog television channels takes effect next April.

Digital television is 10 times more efficient in its use of bandwidth compared with analog, and while pixel-rich HD programming helps mitigate the shortfall in satellite bandwidth demand per TV channel, SES still has about two dozen satellite transponders that |will be freed up by April and remain unsold.

HD Plus is thus a way to bolster SES’s German business even if it will be using fewer transponders for the German television market.