Why Setanta Couldn’t Score Against Sky In Pay-TV Game

image Pay TV in the UK is notable for its disappointing lack of digital strategy. BSkyB (NYSE: BSY) may be pushing its content through the XBox and a standalone online portal — but essentially, despite all the lip service and stated commitment to new, online business models, just like newspapers the industry still relies on old behaviours for revenue: people phoning call centres and taking out cable or satellite TV subscriptions. In any case, the chances that Irish broadcaster Setanta will be around in that battleground for much longer look slim, as crisis meetings with backers continue and it refuses new UK customers (via Guardian.co.uk). But why is it struggling? Here are some thoughts…

Rights gamble: Setanta is failing in the UK simply because it staked its model on football rights and from next season it will hardly have any. It scaled up too quickly, as Sky CEO Jeremy Darroch pointed out (via Guardian.co.uk), and took a huge gamble on getting two of the six English Premier League packages and it ended up with just one.

We’ve no idea how many people use it, but Setanta does have an online-only, live streaming player, but like BSkyB’s Sky Player it seems to only be used as an incentive to get people to sign up for a TV package and not a real standalone product. And it’s pay monthly, not PPV — once you’re paying £7.99 per month for the content through your PC you may as well pay to get it through your TV.

Only one winner: The real issue is about Sky’s dominance. It was a good thing that Setanta chipped away some of its business and a doubly good thing the European Comission ensured Sky couldn’t have 100 percent rights of any one competition. But digital will always fall behind when the league and clubs fall over backwards to accomodate the market leader — the BBC was smug about adding MOTD2 to the iPlayer, but it won’t go online until Tuesday, a full 48 hours after Sunday’s games, all because of the terms of Sky’s deals which also includes highlights. In fairness to Sky the EPL runs the rights auction and decides what form the rights come in — anyone can bid for them — and at the moment linear TV is simply the most profitable format for Sky, the league and the clubs.

IPTV threat: And what of BT (NYSE: BT) Vision? Out-going BT Vision CEO Dan Marks says the IPTV service will struggle reach its subscriptions target of two to three million by 2011 given Sky’s dominance in the movies and live sports arena, and who are we to disagree? Will any IPTV service stand a chance against Sky’s linear TV dominance?

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