Coming back from my summer holiday I was greeted by the news
that Sky had launched - on PCs, Macs and some Android smartphones -
its new broadband movies services, NOW TV. (Here's the official press release in case you
haven't seen it.) I'm a little late to the party on
this one so instead of writing my own analysis I'll summarise some
of the industry comment that's already been made about this story
and try to provide some context.
In that vein I think it's worth stepping back and taking a look
at the landscape that NOW TV is joining.
# The DTT Market
First, here are the companies that have the biggest share of the
DTT (digital terrestrial television) market and Sky's place in that
The BARB website
tells us that there are 26 million television households in the
UK. The market share figures below are based on that
(Sources for these figures are at the bottom of this
# The SVOD Market
We can also take note of the two biggest players in the SVOD
(subscription video-on-demand) space.
Lovefilm had two million active subscribers as at 9 January
2012. Netflix, unfortunately, doesn't publish specific
numbers for its international territories but, based on its first quarter
2012 results (which say that the company had 3.07m
international streaming subscriptions - up 65% from the previous
quarter) we can surmise that the absolute maximum number of UK
subscribers is 1.86 million - and that's if ALL the non-domestic
growth was only in the UK which seems extremely unlikely.
# Industry Reaction
So that's the background and here, as promised, is a digest of
some of the industry reaction.
In an email dated last Friday, Enders Analysis
"NOW TV addresses the growing
opportunity for broadband TV, primarily appealing to the 8 million
non-pay-TV households that have broadband - the same target
audience as Netflix, LoveFilm, BT Vision and YouView. We expect NOW
TV to have only incremental impact on Sky's financials, but it has
the potential to put Sky in pole position in the nascent market for
I'm not an Enders reports subscriber so I can't give you their
full rationale but as
Emma Wells, Marketing Manager at Red Bee Media points out in her
blog post (dated 17 July)
"Launching Now TV is less risky
than it first appears. Given the mounting evidence that viewership
of video online and on mobile devices is not diminishing the
appetite for watching television, Now TV seems unlikely to
cannibalise Sky's pay TV model.
The pay-as-you-go service
targets a new market segment, and acknowledges that "not everyone
is seeking a permanent, paid deal.""
Wells also cites research that suggests
"… the UK television industry
expects online video services to fuel significant industry growth
in the coming years - with annual revenue from pay online TV
predicted to quadruple by 2020. Perhaps if Sky don't
cannibalise their own monthly subscriptions, someone else
Over at paidContent, Robert Andrews writes that the
launch of NOW TV "is only a partial and low-risk debut version
of what, in time, could become a significant, era-defining strategy
for the operator." He goes on to say that it's a "brave move"
for Sky since "Now TV will stream the same programming over a
range of internet devices instead of satellite, and for flexible
monthly and pay-per-view fees instead of an annual monthly
Andrews also quotes Ted Hall, a senior analyst at
Informa, who wonders if NOW TV could backfire on Sky:
"Now TV represents a potentially
dangerous move away from the bundled approach to selling pay TV …
towards an a-la-carte model. Consumers are finally being introduced
to the cherry-picking model they always wanted. The allure of
such freedom could be stronger than Sky intends. What started out
as a defensive move against the new OTT players in town could
backfire if cannibalization of its core business takes
hold. The key will be to keep Now TV on a leash."
Hall says much the same thing
in a piece on the Hollywood Reporter website and
there's a projection by Barclays Capital Markets
analyst, Julien Roch, that
"both LoveFilm and Netflix will
end 2015 with 2.5 million subscribers and Now TV with 1.0 million.
We believe that 2012 will be the year that Internet TV takes off in
the U.K. as the evident success of existing players, such as
LoveFilm is complemented by the launches of Netflix, YouView,
BSkyB's NowTV and potentially Apple's iTV,"
If you didn't already have this conversation last week, what do
you think about the launch of NOW TV? Add your comments below.
Sources for the DTT stats