NOW TV to use movies, sports to take control of UK OTT market

Joseph O'Halloran | 17-07-2012
BSkyB has officially taken the wraps off its NOW TV over-the-top (OTT) service with which it aims to sweep up business from an estimated audience of nearly 15 million people in the UK who don't have subscription TV.To date, the emergence of OTT, in particular Netflix and Hulu, and increasingly Amazon subsidiary LOVEFiLM, has worried pay-TV providers who have struggled with answers to the increasingly popular and cheaper alternatives. By total contrast, and somewhat characteristically, BSkyB has gone toe-to-toe with its would be rivals and will leverage the premium content it has rights to in order to offer a more compelling alternative on a non-subscription basis.From launch, NOW TV will offer the hugely successful Sky Movies service NOW TV customers can ‘pay & play’ for instant access to a range of over 1,000 films through Sky Store including the very latest ‘now on DVD’ releases and much-loved classics. From launch, ‘now on DVD’ titles will include recent releases such as We Bought a Zoo, The Woman in Black, The Best Exotic Marigold Hotel, This Means War and Ghost Rider: Spirit of Vengeance. ‘Pay & play’ movies on NOW TV range from 99p for classic titles to £3.49 for blockbusters.NOW TV will also offer a monthly Sky Movies Pass with unlimited access to the entire Sky Movies collection. At any time, customers with a Sky Movies Pass can choose from over 600 films from major Hollywood studios such as Disney, Fox, Paramount, Sony, Warner Bros and Universal. Each Friday, it will offer up to five new and exclusive Sky Movies premieres which the company says will be available at least 12 months before they arrive on other online subscription services.As competitive as this will be compared to other online video services, later in 2012 BskyB will fire the bazooka that is Sky Sports which will screen the crown jewels that is Barclays Premier League and UEFA Champions League football, England Test cricket, Heineken Cup rugby, ATP tennis, and golf.All content will be available across a range of internet-connected devices including PC, Mac and selected Android smartphones; on iPhone, iPad within the next month, on Xbox later this summer and YouView when it launches. NOW TV will continue to develop for other platforms and devices, including the Sony PlayStation3 and Roku streaming player.Despite the clear confidence of BSkyB in its new offering, some in the analyst community believe that the launch is certainly not without risk to the pay-TV giant. Said Ted Hall, Senior Analyst at Informa Telecoms & Media: “As a product for the post-10-million-subscribers era, [NOW TV] is a different kind of pay-TV proposition, one that removes the barrier of a long-term commitment in order to attract a new audience. The allure of such freedom could be stronger than Sky intends, with cost-conscious satellite customers now presented with a more flexible alternative – still accessible on the living room TV set – which they can switch to without having to desert their long-trusted pay-TV provider.”Commented Strategy Analytics' Ed Barton, Head of Digital Media Analysis and Forecasting: “Following two of the slowest quarters in Sky’s history – subscriber numbers increased by just 15,000 in the first quarter of 2012 – Sky needs to invest in businesses with long term growth potential now given slowing pay TV growth. Sky’s strategy of increasing what customers get for a Sky TV subscription has served it well for years however the long-term subscription model isn’t going to work in a fragmenting environment in which consumers want more flexibility across more devices…Growth in the audience and usage rates of online streaming services make mass market propositions such as NOW TV commercially viable.”Added Cesar Bachelet, Senior Analyst at Analysys Mason: “Pricing is a balancing act: [NOW TV] needs to attract non-pay-TV subscribers that the offer is targeted at, but should not risk cannibalising traditional pay-TV, e.g. standard subscribers abandoning premium packages and opting for NOW TV instead. [This is] a calculated risk by Sky: There is a risk that some standard satellite pay-TV subscribers who only signed up to the basic packages (which start from £21.50 per month) because they are a prerequisite to getting the premium Sky movies add-on package drop their standard subscription and take up NOW TV instead, as they can now get the content they want more cheaply on its own.”