The over-the-top video-on-demand (OTT VOD) market has boomed over the past few years. Many have suggested that these OTT VOD services are having a negative effect on the fortunes of established pay TV services like Sky. While this may be the case, the scale of the impact is (in my opinion) far less than people think.
It is true that Sky’s glory days where if you had anything other than the terrestrial channels, you almost definitely had a Sky subscription, are behind us. However, I wouldn’t be so quick to lay the blame at the feet of Netflix and other OTT video-on-demand providers.
According to research by the Broadcasters Audience Research Board (BARB), Netflix is now in more than 10% of UK households. The surprising thing is that the instance of households having Netflix is particularly high amongst those who already have Sky subscriptions. I believe this is because Netflix and other OTT VOD services are NOT replacing pay TV services, they are complimenting them and replacing Blockbusters, the local video store and DVD box sets.
As I see it there are two major threats to Sky’s business and neither of them are OTT offerings. The first is pirates. Pirate TV and Film has been around for as long as the medium has and is unlikely to stop any time soon. Pirate platforms like Popcorn Time are not only allowing people to stream TV and films illegally but offering a great user experience and easy to use interface. Popcorn Time doesn’t host any copyrighted material itself. It has a decentralised model with individuals ‘sharing’ films and TV programs as BitTorrent files. This makes it even harder to fight the pirates effectively.
The other threat (and the only one Sky has a hope of combatting) is the fact that an increasing number of their competitors are moving towards a ‘quad play’ offering. Vodafone announced recently that the company intends to launch a TV service next year and news this week has suggested that BT are looking into acquiring a mobile arm with O2 and EE being suggested as possible targets. If and when these plans come to fruition, BT and Vodafone will join Virgin Media in offering TV, mobile, fixed line telephone services and broadband in one place. If a greater number of Sky’s competitors offered ‘quad play’, Sky might become justifiably nervous. Sky already offer phone, broadband and TV, but will it be enough or will we soon hear news that Sky are looking for a mobile arm as well?
Source: Vine 14