A growing sense of disillusionment in the broad media sector with the free model as a means of funding content has resulted in a gradual re-discovery of the merits of a paid-for model, according to Sky COO Mike Darcey.
Addressing the IEA Future of Broadcasting Conference in London, Darcey said that the UK pay-TV sector had never been in ruder health with Sky, Virgin Media and BT between them reaching 50% of households.
However, Darcey questioned what he described as “the implicit assumption” that access to Sky Sports has been pivotal to the success of UK pay-TV. “It’s an argument that BT has often made in explaining the progress of BT Vision to date. If that’s a belief they genuinely hold, I think they’re in for a rude awakening. Looking towards sustaining pay-TV success longer-term, it’s not just about sport. Yes, it continues to be an important piece of the pay TV jigsaw. And yes, it was the infamous ‘battering ram’ for pay-TV in its infancy, when it needed to assert itself on the UK broadcasting landscape. But the world has long since moved on – and although sports is still a major part of what helps define our service, there are many people for whom Sky Sports is not the only factor in their decision to subscribe”.
Yesterday, BSkyB signed, perhaps begrudgingly, a contract to allow BT to deliver Sky Sports 1 and 2 over its IPTV network – albeit via terrestrial capacity. It followed the tentative agreement through the Competition Appeal in the wake of Ofcom’s Pay-TV Review.
Darcey said that the assumption that there was little value in content beyond premium sports was wrong, highlighting that entertainment channel Sky 1 was rated by Sky viewers as their fourth favourite channel, and that Premier League football accounts for less than 5% of all pay-TV viewing in Sky homes.
Beyond content, Darcey said that the growth of pay-TV would continued to be sustained by innovation, highlighting the satcaster’s 3D broadcasts and the consumer launch of the Sky 3D channel in the autumn. “Some people are not convinced about 3D, believing it to be a passing fad, a bit of a gimmick. That’s fair enough, and they are entitled to their view. But I suspect that they are roughly the same industry sages who were questioning the significance of HD in the not too distant past. That time around, while many in the industry were sceptical, Sky took an early bet on HD and we bet big. So far, we’ve invested around £500 million to build Europe’s leading HD offering”.
Darcey said Sky’s innovation roadmap was as dynamic as ever and that the early commitment to HD was beginning to pay real dividends as customers responded in ever-increasing numbers.