Strategies for Digital Television: DTT in Italy

Italian broadcasting has long been terrestrial. Its main shortcomings (spectrum chaos, non-enforcement of the law and market concentration) were considered not conducive to a rapid and reliable diffusion of digital terrestrial television (DTT). In 2005, the private free to air duopolist Mediaset entered the pay television market with an offer on DTT and, within a few years, has proved to be a fast-growing operator, threatening the established satellite incumbent (Sky). This evidence apparently challenges the received wisdom of the literature and the business practice. With the aim of explaining these peculiar market dynamics, this article examines the operators’ strategies, controlling for the institutional side and the policy. A few main points stand out. First, the enduring spectrum chaos has not significantly hampered Mediaset, nor was spectrum a binding constraint, thanks to biased regulation. Second, the entrant crafted a coherent and gradual “premium content” strategy, fine-tuning its evolution in accordance with the platform diffusion. Third, the public policy for digital TV served as a supporting complement to the private strategy. In particular, being biased, it favored the diffusion of DTT over rival platforms, and benefited its main pay-TV offer. Overall, our analysis uncovers a complex and unique national case, rooted in an effective, albeit contentious, public–private interplay. Consequently, the Italian case does not convincingly challenge the received wisdom on DTT.