Julian Clover believes the settlement of the Sky-Virgin carriage spat is just a part of a renaissance of the basic package
Basic cable has always adjusted to the needs of the market, whether it is as a starter package of less than a dozen channels, or the big basic concept that gives you more than all you can eat.
Digital switchover is now presenting something of a problem, particularly in those markets where the bulk of the terrestrial offer is free-to-air, though many operators have seen their basic subscribers being eroded by the arrival of DTT. If you can get a good selection of content from your DTT package then why even bother calling your local cable company.
On the other side pay-TV packs are coming close to saturation, other than a minor generational effect, if you’ve been offering a pay-TV service for the past 15 years then it is a reasonable assumption that the majority of your audience will know what you have to offer. Some operators still continue to deliver new subscribers, notably BSkyB and this week Sky Italia.
The argument between Sky and Virgin over the carriage of their basic channels in each other’s basic packages goes to the heart of the issue that operators are now facing. If you want to build your subscriber levels, luring them into pay-per-view, telephony and broadband internet (as if speeds of 100 Mbps weren’t enough) then you need a strong basic package and that requires channel investment.
Sky has put money into Sky 1 through bankable US series and investment in original studio-based entertainment. Virgin thought the same having worked on Living, Trouble and the new Virgin 1, though had already signed a deal, renewed this week as part of the £37 million two-way settlement. As operators both Sky and Virgin need the content to broaden out their offers. It is not to denigrate the appeal of any of the channel’s output, the point here is that the quality has markedly improved over the past five, maybe even two years, but not to the extent that it is worth pretending that the channels can be marketed as premium.
The difference between the UK and Germany, and ultimately Germany’s blessing has been as curse, in that it is full of general entertainment channels whereas the UK has lacked both numbers and quality. The repositioning of UKTV’s channel line-up that has taken elements of the old UK Gold and, combining with original production, created Watch has given another solid entertainment platform. Sky One and Watch can only be received through subscription, and when you then round up the usual suspects of Discovery, CNN, MTV and Living you have a platform on which to build.
