Sky to launch new internet TV service
Sky has announced plans to launch a new service allowing customers to watch some of its content over the internet. The new service will be an additional choice for people who do not currently subscribe to a pay TV service.
Launching in the first half of 2012, the service aims to provide instant and simple access to a range of Sky content, including hundreds of films from Sky Movies. It will be available to anyone in the UK with a broadband connection.
Sky Movies will be available on the service from launch, before it expands to offer sport and entertainment.
There will be a number of payment options, including a monthly payment for unlimited access to Sky Movies or rent a single film on a pay as you go basis. There is no minimum contract.
The service will be available across a range of connected devices, including PCs, Macs, laptops, tablets, mobile phones, games consoles and connected TVs.
Sky claims the service will be easy to use, “with immediate streaming through an intuitive interface, backed up by recommendations and editorial support”.
More details of the new service will be revealed closer to launch.
Sky Go will continue to develop as a bonus service for existing Sky TV customers, offering access to a range of live channels and on demand content. The launch of a new internet TV service aims to “complement Sky’s existing pay TV services and open up a wider opportunity to bring its content to more consumers”.
Jeremy Darroch, Sky’s chief executive, said: “This exciting new service will offer some of Sky’s most popular content through a wide range of broadband connected devices. Alongside the continued growth of our satellite platform, this will be a new way for us to reach out to consumers who love great content, but may not want the full Sky service. Bringing a distinctive, new choice to the marketplace will help us meet the needs and demands of an ever wider range of consumers.
“This new product launch will build on our early leadership in multi-platform distribution. It will allow us to make our expertise and investment in content and technology work even harder, extending our options for continued growth.”
I guess this is a reponse to the growth of the likes of Netflix and Lovefilm.
Sky’s traditional market must be close to saturation. They sit in over 10 million homes (circa 25 million homes in the UK) and there is not much growth left across their current platform.
Therefore they have two choices for ‘In Home Entertainment’ growth in the UK. They can increase their revenues by up-selling to their current customer base. So encourage them to buy the more expensive packages, such as HD, sport or 3D. Or they can try and penetrate the free-view market via a new ‘cost effective’ platform.
The problems with this is that the free-view market is’t so keen on paying premiums for content (especially to Mr Murdoch). This means that you have to create a product that will attract ‘free-viewers’, which in turn doesn’t canabilise your legacy premium client base.
Being a ‘free-viewer’ myself, I will probably try Sky’s new internet TV offering purely because I believe that the content might be strong enough and at a price that is more competitive than previous Sky offerings. However, I wonder how many traditional Sky viewers may also do this and then convert to Sky’s lower revenue model? I suppose the challenge to Sky is to use this Internet TV service to exclusively target new customers, rather than simply convert premium customers.