To date, in the US, attempts to reach customers with TV-Everywhere solutions have only been made from within the pay-TV package. To get access, a consumer must have a pay-TV subscription. Does it have to be this way? The UK’s Sky doesn’t think so.
In 2012, the Sky satellite service struck a dramatic change in course with the release of its NowTV Internet video offering. The company was already making much of its content available to subscribers online through the Sky Go TV Everywhere app on tablets, smartphones and game consoles. However, subscriber growth had slowed, inching above 10 million, and Sky Go wasn’t helping to reignite growth.
The company had to face the fact that everyone that wanted Sky television service under the current subscription terms already had it. The answer the company came up with was the “Sky-lite” approach called to NowTV. UK broadband users can watch content through NowTV under very different terms than Sky satellite. They can get a one month Sky movies pass, to both on-demand and live TV, for £8.99 ($15) and even get a day pass to 6 channels of live premium sport for £9.99 ($17) with no further commitment.
At the time there was much speculation that NowTV would cannibalize Sky’s existing customer base as people ditched monthly sports packages for occasional daily access through NowTV. Has this happened? Not according to Hilary Perchard, VP of Business Development at Sky. I interviewed him at the TV of Tomorrow show in San Francisco to understand how this radical experiment in TV Everywhere delivery was working for the company. As you will see from the interview, far from cannibalizing existing subscribers, NowTV is allowing Sky to reach an audience that had proved resistant to the allure of the Premium Sky satellite service.
Mr. Perchard says that usage of Sky Go is higher in the UK than operator apps in the US. He says a third of Sky customers use Sky Go every month. In the US, 21% have authenticated the apps and less than half of those use them on a weekly basis. He also says that people are still watching the same amount of linear TV, and adding some extra through Sky Go.
The groups NowTV is resonating with are young people that can’t afford pay-TV and older people that have looked at pay-TV and decided it’s not for them. Mr. Perchard described the positioning of its two brands as: “We have our big brand, Sky TV, for people that want a lot and NowTV for people that just want a little.” He also says that NowTV is not cannibalizing Sky customers.
Perhaps we are set to see an operator in the U.S. try the same approach early next year. Executives at Dish Network have stated they will launch an OTT service, not requiring a traditional pay-TV subscription, by early 2015.
Why it matters
Services like Netflix and Amazon Prime video are tapping into a desire for a lighter approach to TV services.
Operators in the U.S. have been resistant to the idea of competing with these services on their terms.
Sky is proving an operator can provide “lite” pay-TV services online without damaging the traditional pay-TV business.