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Informa: OTT success could be more than Sky bargained for

Sky’s planned launch of its new over-the-top (OTT) video service ‘Now TV’ tomorrow (July 17th) is not without risk, according to Informa Telecoms & Media (publisher of IP&TV News), which believes that it is a potentially risky move away from the bundled approach to selling pay-TV.

Ted Hall, Senior Analyst at Informa Telecoms & Media, comments: “As a product for the post-10-million-subscribers era, it is a different kind of pay-TV proposition, one that removes the barrier of a long-term commitment in order to attract a new audience.

“The allure of such freedom could be stronger than Sky intends, with cost-conscious satellite customers now presented with a more flexible alternative – still accessible on the living room TV set – which they can switch to without having to desert their long-trusted pay-TV provider.”

The Informa analyst adds that the service also represents a “potentially dangerous” move away from the bundles approach to selling pay-TV, whereby popular channels are packaged with less desirable ones, enabling users to cherry-pick the ones they want, and possibly disrupting the established economics of pay-TV.

“This could lead many to question why they need a traditional subscription when the option to pay for only the content they actually want is available as an OTT alternative,” says Mr. Hall.

He counsels that the key to avoiding the possibility of customer cannibalisation (and thus lower ARPUs) is to keep it on a leash: “If Sky allows it to become too good, too much like its full subscription service, the operator will stand to lose a sizable number of DTH customers willing to make the OTT switch – too much overlap between the two platforms will start to take the sheen off the appeal of the main Sky TV proposition.

“In launching Now TV, Sky also finds itself in a curious relationship with YouView, choosing to distribute its content via the platform it staunchly opposed prior to accepting its eventual arrival. With both players now targeting the same free-to-air audience, and via the same device, Sky will be doing so with more of a sense of trepidation, as success for Now TV via YouView could have major implications for the way the operator delivers and packages its premium content in the years to come.”

For more details on tomorrow’s launch of Now TV (including pricing and content), please click here.

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