As if Sky would let Netflix and Lovefilm have the market to itself. Julian Clover assesses the market position.
Almost everything that happens in our world is now described as a competitor to Netflix; actually the announcement that Sky was to launch an internet-based TV platform will probably be more of a competitor than most. Actually comparison was also made to YouView, but curiously not Virgin Media, which has been doing VOD through its cable pipes for longer than most. The press announcement also used that wonderful phrase that referred to people who don’t currently subscribe to pay-TV.
For those who do subscribe to pay-TV, here we’re talking about Sky but as is so often the case it could apply to any operator, there is no reason to go anywhere and that is the idea.
We know that the mobile/tablet-based services are being launched to stop people from straying. When it comes down to it there seems to be little point as we stand today of a consumer dropping their HD movie subscription in favour of over-the-top delivery. At least not just yet.
Where it will start to get interesting is when Sky announces its precise pricing model. What we know so far is that there will be no minimum contract and customers will be able to pay monthly for unlimited access to Sky Movies or rent a single movie on a simple, pay-as-you-go basis.
Netflix is currently offering a free month to get you underway, followed by a monthly £5.99, The Amazon-owned Lovefilm has an immediate starting point of £4.99.
When in August 2010 Ofcom said it would refer the sale of pay-TV movie rights to the Competition Commission Sky had no Subscription-Video-on-Demand service available. This is no longer the case and the on demand service currently available only to those subscribers that take Sky’s own broadband service will within the next few months be extended to anyone that has a suitably equipped set-top box.
This means the number of homes capable of receiving the service will potentially increase from one million to five million. Think about this for a moment. These will be homes that might also own the type of games consoles on which Netflix and Lovefilm can be received.
The move might have been anticipated since the launch of Sky Anytime+, but as ever Sky’s timing is spot on.
When a company is as successful as Sky it is naturally the job of the journalist to try and find fault lines. So the company may have reported the highest ever first half profits, but the naysayers were busy pointing at falling advertising revenues and declining TV homes.
But of course with the digitiation process all but complete, pay-TV was going to run out of new subscribers sooner or later. The move to launch an internet-only option is of course partially defensive to keep the green field a green and pleasant land.