BSkyB shows how streaming could be the future of pay TV


U.K. satellite provider BSkyB (s BSY) could show its counterparts across the pond a thing or two. While U.S. cable and satellite operators were gingerly stepping into the TV Everywhere market, Sky was making full live TV broadcasts available for streaming online. Recent moves to increase the amount of streaming content, and even to make it available to non-subscribers, could provide a blueprint for similar services here.

To an outside observer, Sky’s offerings might seem a perfect blend of traditional pay TV services along with a streaming video component at no extra cost. Next month, the satellite provider is introducing Sky Go, a free service to existing subscribers that will let them watch live programming on PCs as well as mobile devices like the iPhone and iPad (s AAPL). That’s in addition to live streaming on the Microsoft Xbox (s MSFT) and FetchTV set-top boxes. This service will be available for free as part of users’ existing satellite subscriptions.

But here’s the really interesting part: Sky will be taking that initiative one step further, also introducing a streaming-only service to customers that might not want to actually install a satellite dish. In August, the operator will make Sky Go available to non-satellite subscribers, at relatively modest rates that range from £15 (about $25 USD) to £40.

In addition, the company’s Sky Anytime+ video-on-demand offering, for instance, provides more than 500 movie titles, as well as a wide range of TV programming. It’s basically like having a Netflix (s NFLX) account tacked on to your satellite service, and it’s all available for free to users who subscribe to Sky TV and Sky broadband and have the latest HD set-top box.

That strategy already appears to be working. Launched in April of this year, Sky Anytime+ is already being used by 800,000 of Sky’s 10 million subscribers.

There are still some limitations to these services. Sky Go on a laptop offers 30 channels of live TV, including Sky Sports channels, Sky Movies, Sky News, ESPN (s DIS), MTV (s VIA), Disney, Nickelodeon, National Geographic and the History Channel. But only Sky Sports, Sky News and ESPN are available on mobile devices like the iPad for now, with other channels being added later.

Implications for the U.S. market

There’s an argument to be made that some U.S. operators have already implemented some of the same features or capabilities that Sky offers. Cablevision (s CVC) and Time Warner Cable (s TWC) have already introduced iPad apps with live streaming, and with a lot more content than Sky currently offers. Cablevision’s full slate of programming is available on its app, while Time Warner Cable now has more than 100 channels available to users. Meanwhile, Sky’s streaming VOD service isn’t that different from free cable VOD services that have been around for years.

The difference, for me at least, is the way in which Sky’s investment in streaming for its delivery of these services can be used to create new business models: for instance, the availability of Sky Go to non-satellite subscribers. By launching that offering, Sky is leveraging video assets it already has and making them available without tying those users to a certain piece of hardware (like a satellite dish) or a particular broadband provider.

Will we see the same type of service emerge from a U.S. pay TV service anytime soon? Most seem to be treading cautiously, tied down by rights that limit where certain channels can appear and on what devices. But if I had to guess, I wouldn’t be surprised to see Dish Network (s DISH) try something similar sometime in the near future.

Over the past few years, Dish and sister technology company Echostar (s sats) have assembled most of the parts needed to introduce an over-the-top streaming offering, including streaming set-top expertise (Move Networks), online VOD (Blockbuster) and even some wireless spectrum if it plans to launch a wireless IP service rather than connecting through competing ISPs’ networks. It seems only a matter of time before it combines those pieces and puts them to work.


Eliot Blades

Further to Dan’s comment, the TV license-funded OTA services such as Freeview already provide much of the content which Sky will provide on the lower priced streaming packages to non-Sky subscribers. If you want some of the premium content – particularly Sports, which broadcasts football which Sky has a complete lock on in this territory – you will be paying the £40, at which point you may as well subscribe to Sky (which is I guess the point).


As far as TV content pricing in the UK market, it’s important to point out that the “streaming only” price is in addition to the government-mandated TV tax (the “TV License”), which is £145.50 a year. This tax, paid by anyone who owns a TV set/tuner-equipped device, and/or someone who uses live streaming, funds the BBC as well as the suite of 50ish SD channels and a smattering of HD channels called Freeview which are delivered over-the-air. (Free in the sense that there are no additional monthly fees, like Sky or Virgin Cable, etc.) That tax applies when watching any streaming content, even on a computer, if the content is also simultaneously being transmitted on a TV channel. (read: it doesn’t apply to OTT VOD/catch up services like BBC iPlayer if consumed on a computer/game console or another tuner-less device.)

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