Editing ITV Digital (section)

===Setbacks===
In 1999, Sky started to give away their digiboxes for free whilst the customer subscribed. This was a problem for ONdigital, as they had no choice but to sell prepaid set top boxes to win customers back from rival services.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/1896732.stm|title=ITV Digital goes broke|year=2002}}</ref> Even when they decided to sell prepaid set top boxes (under the ONprepaid brand), they could not easily compete with Sky.

ONdigital's growth slowed throughout 2000, and by the start of 2001 the number of subscribers was no longer increasing; meanwhile, its competitor Sky Digital oversaw a dramatic increase in subscribers, spearheaded by the launch of interactive services, such as [[Open...]] and [[Sky Gamestar]], and the launch of rival cable digital services from the likes of NTL and Telewest ate into ONdigital's subscriber numbers. The ONdigital management team responded with a series of free set-top box promotions, initially at retailers such as [[Currys]] and [[Dixons (online)|Dixons]], when ONdigital receiving equipment was purchased at the same time as a television set or similarly priced piece of equipment. These offers eventually became permanent, with the set-top box loaned to the customer at no charge for as long as they continued to subscribe to ONdigital, an offer that was matched by Sky. ONdigital's [[churn rate]], a measure of the number of subscribers leaving the service, reached 28% during 2001.<ref>{{cite episode | title = Monkey Business | series = [[The Money Programme]] | network = BBC Two | airdate = 2002-06-12 | minutes = 19}}</ref>

Additional problems for ONdigital were the choice of [[64QAM]] broadcast mode, which when coupled with far weaker than expected broadcast power, meant that the signal was weak in many areas; a complex pricing structure with many options; a poor-quality subscriber management system (adapted from [[Canal+ (French TV channel)|Canal+]]); a paper magazine TV guide whereas BSkyB had an [[Electronic program guide|electronic programme guide]] (EPG); insufficient technical customer services; and much [[Pirate decryption|signal piracy]]. While there was a limited return path provided via an in-built 2400 baud [[modem]], there was no requirement, as there was with BSkyB, to connect the set-top box's modem to a phone line.{{cn|date=August 2022}}

With this combination of factors contributing to the service's lack of popularity, in 2001, executives at ONdigital management wrote a letter to the government, asking for emergency funding to finance the service in order to keep it alive due to a lack of customers and paying members.{{Citation needed|date=July 2022}}

==== Loaned equipment ====
[[File:ONdigitalcard.jpg|thumb|ONdigital viewing card]]
ONdigital began to sell prepaid set-top boxes (under the name ONprepaid) from November 1999 in order to win customers, especially at the launch of other digital services from the likes of [[NTL Incorporated|NTL]] and [[Telewest]]. This bundle sold in high street shops and supermarkets at a price that included the set-top box (which was technically on loan) and the first year's subscription package.<ref>{{cite web|url=https://www.campaignlive.co.uk/article/ondigital-prepaid-digital-boxes-go-sales-uk-wide/43434|title=ONdigital prepaid digital boxes go sales UK-wide}}</ref> These prepaid boxes amounted to 50% of sales in December 1999.<ref>{{cite web|url=https://www.theguardian.com/business/2000/jan/12/14|title=ONdigital reports 34% rise in sales|first=Terry|last=Macalister|date=12 January 2000|website=The Guardian}}</ref> Thousands of these packages were also sold at well below retail price on auction sites such as the then-popular [[Tradus|QXL]]. As the call to activate the viewing card did not require any bank details, many ONdigital boxes which were supposed to be on loan were at unverifiable addresses. This was later changed so a customer could not buy a box without ONdigital verifying their address. Many customers did not activate the viewing card at all, although where the viewer's address was known, ONdigital would write informing them that they must activate before a certain deadline.{{Citation needed|date=February 2011}}

==== Piracy ====
The ONdigital [[pay-per-view]] channels were encrypted using a system – [[Nagra France|SECA]] [[MediaGuard]] – which had subsequently been cracked by hackers working for NDS Group, the makers of the [[VideoGuard]] system that Sky Digital used. ONdigital did not update this system, therefore it was possible to produce and sell counterfeit subscription cards which would give access to all the channels.<ref>{{cite news
    | url       = http://news.bbc.co.uk/1/hi/entertainment/tv_and_radio/1879859.stm
    | title     = Tempting the digital refuseniks
    | date      = 19 March 2002
    | work = BBC News
}}</ref> About 100,000 pirate cards were in circulation by 2002, and these played a role in the demise of the broadcaster that year.<ref>{{cite web|url=https://www.telegraph.co.uk/news/uknews/1393115/Background-to-failure-of-the-digital-dream.html|title=Background to failure of the digital dream|year=2002}}</ref>