01 Aug 1998

The decision by BSkyB to revamp its three movie channels and add more than just a new name or two is long overdue. It also speaks volumes about how BSkyB is changing its strategy to get ready for the brave new world of digital competition.

Of course, for current subscribers to the Sky service, like me, all this sounds like deja-vu. It was not even a year ago that the movie channels (Sky Movies and The Movie Channel) changed their names, becoming Screen 1 and Screen 2. But you couldn't really determine what the difference (if any) there was between them. Yes, the third channel Movies Gold was obviously oldie mouldies, or classics as the marketeers like to say, but the two Screen channels were just, well, two movie channels.

BSkyB general manager Elisabeth Murdoch admitted as much after the press breakfast about the latest re-launch, adding that this "catalogue of movies" approach has to change as competition heats up. In digital, the Movie channels will face competition for the first time from pay-per-view movie services, both Sky's own Box Office as well as from other pay-per-view offers - for example, from the cable-backed Front Row. People who just want to watch movies will just buy them one at a time rather than pay a monthly fee for the movie channels, that is unless there is something more than movies on them.

So Sky is adding a lot more. The new channels will have distinct identities and Sky will spend about 10 per cent of its £240 million movie budget on acquiring and making original programming, including at least three made-for-TV movies before 2000. This original programming push is a first for Sky and it has become a sort of mantra for Elisabeth Murdoch, who has clearly studied the homework of pay-TV channel HBO in the US, which pioneered this strategy.

The Sky Movies channels will all have a distinct look. So the Premier channel will be for blockbusters and authoritative commentary from well-known film correspondent Barry Norman, poached by BSkyB after 26 years at the BBC. Someone at the press breakfast said the BBC only had a one-month notice period in Barry's contract, which if true, speaks volumes about the BBC's need for a commercial reality injection...

The MovieMax channel will be all adrenaline, ricocheting the viewer between kick-boxing and car chases and romantic comedy. MovieMax's headliner will be Sky film commentator Richard Jobson who will host a new talk show billed as a cross between Jerry Springer and The Late Show. Jobson complained to me at the press breakfast that his channel is billed as the "muscle" channel, while Premier is the "heart" and the "soul" label goes to the classics channel Sky Cinema. "Does this mean they think I'm all brawn and no brain?," he asked me. I laughed and said things could be worse than being called a hunk. I think that cheered him up.

All these movie moves are important because keeping people paying for the movie channels is crucial to BSkyB's bottom line. Sky gets to keep a higher margin on its movie subscriptions, while pay-per-view is typically a 50/50 revenue split with the studio supplying the film. In the last few quarters Sky also has been watching its movie subscribers turn off at a much faster rate, while new subscriptions have slowed with consumer uncertainty about digital and the perceived high cost of the channels.

The importance of getting the movie strategy right was underlined by the way it was announced. Elisabeth presided over a select group invited to breakfast at the Dorchester Hotel on London's Park Lane. I say select because I had to lobby to get in myself. Not only were Sky's new ammunition Barry Norman and his producer there, but so was Mark Booth, Sky's CEO.

But as the lights dimmed for the presentation it became clear this was Elisabeth's show. She gave the only speech and introduced the taped presentations herself but she didn't even introduce her own boss Mark.

A year from now Elisabeth won't have to stand up for the third annual re-branding of the Sky Movie channels. By then, what she will have hopefully achieved is customer acceptance of what digital technology will have allowed the Movie channels to become. In digital, the three movie channels will be multi-plexed which means they will be time-shifted to create 11 total channels. So for example, in addition to MovieMax there will be MovieMax 2, 3, and 4, giving viewers more options to see what they want when they want. The digital electronic programme guide will also allow you to set an alarm system, which will remind you via an on-screen message that the movie you wanted to see is starting.

Assuming the rumoured digital technology bugs in its new set-top boxes can be smoothed out, Sky is still looking at a lot of marketing and price tweaking and competion from the rival digital terrestrial TV offer from British Digital Broadcasting. Elisabeth says that she thinks BDB is "dead in the water" lacking any real USP, but she would say that. Certainly there will be a fight, but one thing is clear. By this time next year Sky will have the beginnings of a programme catalogue it actually owns, which not only should bolster loyalty to its own service but also start to provide a new revenue stream.