Kate Bulkley, Media Analyst.

OTT battle has only just begun

By Kate Bulkley

Broadcast News

Share |

For Broadcast July 02, 2015

Streaming content is set to be the next big thing, says Kate Bulkley

There are many screens in my house and a lot of options to choose from on each one. Yet I can’t say I am ecstatic about it, because each of them seems to offer a different bit of video entertainment and a different way to find it. But things are starting to change. Virgin Media now bundles Netflix into its main programme guide, while Sky’s Now TV is upgrading its user interface, adding some of those Netflix functions that we all love, like autoplay.

Speaking at the Connected TV World Summit, a panel of design and device experts from pay-TV companies across Europe said that better content discovery and automated curation were at the top of their development list. Being able to out-Google Google is going to be key.

Anthony Wood, chief executive of Roku, which makes streaming video boxes and dongles, including the Now TV box for Sky, said we are entering the “next phase of TV distribution” and it’s all going to be about streaming video.

According to recent Ampere Analysis consumer research, more than 25% of UK pay-TV homes also take an SVoD service.

“Taking an OTT service does not mean you are not willing to pay for TV,” says Ampere analyst Guy Bisson. “But we are very close to an inflection point where OTT becomes a significant platform in its own right, and the challenge for the pay-TV operators is to capture and monetise that market.”

Sky’s ‘pay-TV-lite’ Now TV does just that. It offers something to all those Freeview customers who want a bit more television but don’t want a dish or an expensive contract. The commercial reason for Sky was clear: use some of its killer content at flexible and lower price points to bring in new customers, and at the same time capture any high-paying customers that might want to leave its service.

Because Sky doesn’t break out its Now TV numbers, we have to rely on analysts like IHS, which believes Now TV is currently providing the only net growth in Sky TV subscribers and that its core pay-TV business is losing customers. Sky counters that 90% of its Now TV subscribers are new and the number of television customers leaving Sky fell in its most recent financial quarter.

But it’s a crowded market out there. Sky admits that 40% of Now TV subscribers also subscribe to Netflix, while 20% are subscribers to Amazon Prime. At some point, customers will be faced with making a choice about which service they are prepared to pay for.

Now TV is a higher-margin business than the core Sky TV product, according to Sky. But the challenge is to continue to grow overall revenue per user, and one way Sky thinks it can do that is through better content.

Sky hopes that the likes of Game Of Thrones (pictured) and live sport will make Now TV the OTT option of choice. But the battle over this particular ‘iron throne’ will likely continue for several years to come. Maybe the best result would be a universal search app that covers them all.

Columns Menu