TopTV will launch high-definition channels next year as it takes its fight for subscribers with incumbent pay-TV operator MultiChoice to the next level.

The company, owned by On Digital Media (ODM), says it expects to launch HD channels in the second half of 2011.

ODM CEO Vino Govender says in an exclusive interview with TechCentral that it’s too early to say which channels will be offered in HD, or how many there’ll be at launch, but he says the company is adopting HD broadcasts in response to consumer demand.

When it launched TopTV in May, ODM said it had no intention of offering HD channels.

But it’s since changed its mind because consumers in its target market — people in living standards measures five to eight — are demanding HD services.

“If you go to Maponya Mall in Soweto, and speak to the guys selling TVs, they’re only selling HD TVs and that’s the case across the country,” Govender says. “The market is taking to it and we need to be there from a technology point of view.”

ODM has already designed the specifications of an HD personal video recorder (PVR) that it plans to introduce in 2011.

The HD PVR’s design is awaiting final sign-off from ODM’s board and should go into production by May 2011.

ODM hasn’t chosen a manufacturer yet. It’s standard-definition boxes are made by Altech UEC.

The company doesn’t know yet if it will offer video-on-demand services using its PVR. That decision will be made closer to the launch date, Govender says.

TopTV will not levy an additional fee for subscribers to watch HD channels.

Govender says TopTV is able to offer HD channels because of spare capacity it has access to on shareholder SES Astra’s satellites.

“By the end of next year, SES is launching another 24 transponders in our orbital slot,” he says. “That means there’s space for another 400 channels.”

Its HD broadcasts will use the same HD+ technology used by Sky in Germany — Sky Deutschland and TopTV have the same technical service provider, Astra Platform Services.

TopTV decoder — TopTV's standard-definition decoder (click to enlarge)

Govender won’t say how many active subscribers TopTV has — he says the board has decided not to publish this information for competitive reasons — but he says the broadcaster is ahead of where it expected to be in terms of its original business plan.

He says decoder sales have accelerated in the past three months as the festive season approaches. “We expect good turnover ahead of Christmas.”

About 65% of TopTV subscribers have elected to take the top-end bouquet, which costs R249/month. The remaining 35% have taken a mix of the other bouquets, which cost between R99/month and R219/month.

Govender says that because such a high proportion of subscribers are opting for the premium bouquet, ODM’s average revenue per user — Arpu is a key industry measure — is well ahead of what it had expected.

ODM has spent about 60% of the equity provided by shareholders, and hasn’t yet touched a R200m debt facility provided by the Development Bank of Southern Africa.

“I’m trying not to use the debt facility because I don’t like paying interest,” Govender says.

He says TopTV is about 30 000 subscribers away from “fixed-cost breakeven” — in other words, if it stopped marketing, it would require only 30 000 more subscribers to start making a profit, Govender says.

He expects the company will become profitable on a monthly basis in August 2011.

Other than its plans to launch HD services, Govender says TopTV will introduce new standard-definition channels next year. Already, it’s launched an Indian bouquet to take on DStv’s two Indian products.

The Top Star bouquet, which will cost R60/month (it’s free until the of December in an effort to lure people in), offers four channels from News Corp’s stable in India — Star Plus, Star Gold, Vijay and Channel V.

“We are looking to add another 10 channels onto the platform by the end of February next year,” Govender says. One of these will be a new sports channel.

There are no immediate plans to produce local content. That will come after mid-2011, he says.

“We are doing some local content on Top Gospel, but aside from that we haven’t started doing any commissioning yet.”

Though some customers are electing to subscribe to both DStv and TopTV — mainly wealthy households that want greater choice — Govender says the company’s target market remains mainly people who have only had free-to-air television previously. — Duncan McLeod, TechCentral