Sky is Falling

3 Feb, 2011 | MediaTdp

It was interesting reading some of the opinions about Amazon’s purchase of Lovefilm and the content provisions being undertaken by Netflix.  They show that streaming and online media are on the brink of replacing traditional broadcast media channels.  While we in the UK may not suffer from adverts in quite so bad a way as the US, I think most people would agree that Hulu CEO Jason Kilar makes some very good points when he says:

* Traditional TV has too many ads. Users have demonstrated that they will go to great lengths to avoid the advertising load that traditional TV places upon them. Setting aside sports and other live event programming, consumers are increasingly moving to on-demand viewing, in part because of the lighter ad load (achieved via ad-skipping DVRs, traditional video on demand systems, and/or online viewing).

* Consumers want TV to be more convenient for them. People want programs to start at a time that is convenient for their schedules, not at a time dictated to them. Consumption of original TV episodes will eventually mirror theatrical movie attendance: big opening Friday nights, but more consumption will be in the days and weeks afterward. Consumers also want the freedom to be able to watch TV on whatever screen is most convenient for them, be it a smartphone, a tablet, a PC, or, yes, a TV.

* Consumers are demonstrating that they are the greatest marketing force a good television show or movie could ever have, given the powerful social media tools at consumers’ disposal. Consumers now also have the power to immediately tank a bad series, given how fast and broad consumer sentiment is disseminated. This is nothing short of a game-changer for content creators, owners, and distributors.

So when consumers want to watch shows when they want them, what are the options?  Well, we could go the PVR route, which many people already have, but the rise of services like the iPlayer (‘missed a show, catch-up on iPlayer’ as the Beeb often states) say to me that we won’t bother with broadcast media in future, we’ll just switch on the box, pick the show and watch it whenever we want.  Why bother with series link and remembering to set it to record when you can just watch it whenever?  Does that mean the end for broadcast TV?  I don’t think so, but I do think it spells the end for Sky.  At least in its current format.

No longer will you need a satellite dish and decoder box.  No longer will you pay a fortune for channels you don’t want in order to receive the handful (often one or two) you do.  Let’s face it, Sky survives on three things: movies, exclusive series on Sky 1 and Premier League football.  Virgin, BT and Lovefilm already fight with it for movies online, and the latter is only going to get stronger, and TV shows will go the same way.  So that leaves the football, which not only has a lot of residential subscribers, but a huge number of pubs which pay up to £10,000 a year for the privilege.  Well that is currently under attack, with the ability to buy in cheaper services from Europe, Sky’s revenue stream is going to be hit hard (not to mention the Premier League, but it’ll find other sources).

So far the Premier League seems to have shied away from allowing live streaming of matches.  They must change at some point and I suspect you’ll find subscribers leaving in droves, willing to pay £5-£10 a month for football-only online content rather than the £40 a month Sky want, which comes with a host of channels most people don’t want.  In the US, where most people appear to subscribe for a satellite or cable package, the main reason cited why they don’t leave is live sports, which aren’t well covered online.  Once that changes, they’ll say goodbye.

I doubt this is news to Sky.  They’ll be able to reduce costs by not having to pay for satellites, or the fleet of installers, or specialist boxes or maintaining their cards (which need to change so often to keep crackers at bay) and move online, using the brand image to good effect no doubt, but also having to compete with other companies, instead of the market monopoly they currently enjoy.