Written by Media, TV

Sky’s Freeview Strategy

Media Guardian is today reporting that Sky Sports News is coming off the Freeview platform. Up until now, Sky had effectively been using the channel as something to promote their premium sports services. That’s really why they never showed any action in full-screen.
But now they’re pulling the service. I think they’ll get some very annoyed customers. There will be Sky Sports subscribers who watch the service on second TV sets in other rooms, but aren’t likely to subscribe to Sky Multiroom (Sky’s default way to get Average Revenue Per User – ARPU – up).
And of course lots of people enjoyed Jeff Stelling and co. doing Soccer Saturday. This will just drive those people to Final Score on the BBC’s red button.
What I really can’t see is lots of people taking out full subscriptions to make up for the loss of service.
Sky’s replacement service is atrocious. The risible Sky 3 is getting a “+1” channel. Sky 3 doesn’t even really act as a driver to Sky 1, its programming is so dated and poor.
So what are Sky’s long term plans? Well we know that BT Vision and Virgin Media will be pushing their deals for sport this autumn in a big way following Ofcom’s statement on Pay TV made back in March.
Sky is still upset about that, although it has since done a deal with Virgin Media that included acquiring Virgin Media’s wholly owned channels as well as giving full access to Sky’s TV services including red button functionality to Virgin Media subscribers.
Sky could relaunch its Picnic plans that Ofcom previously put a stop to. Indeed I’d suggest that this is highly likely. This is simply an interim step because Sky doesn’t have any hardware in place to allow Freeview viewers to subscribe to encrypted premium Sky Sports and Movies channels. And there’s probably some ongoing discussion about Sky News. Adam Boulton aside, the channel had a reasonable election and I’d imagine garnered a fair few viewers via Freeview. Does Sky now want to ditch those viewers?
Sky faces some interesting challenges. Although a Conservative government might have seemed favourable, it’s not clear how the coalition will effect things. An investigation into the separation of channel delivery and programming can’t be a long way off. And of course we know that News Corporation is trying to take full ownership of BSkyB.
But the threat that Sky really faces is on demand. Satellite is great for some things – not least high bandwidth to deliver a multiplicity of HD TV channels. But it can’t do on demand, which is the way the TV market is going. They’re fighting Canvas tooth and nail for no other reason than it hurts Sky’s business model. If I can buy programmes direct from the studios that make them, do I really need to subscribe to Sky One?
In the meantime hardware manufacturers just work around these issues. Sony’s recent Bravia sets are all internet enabled, and take a lead from their games consoles in providing direct access via the internet to free and subscription television services. And this autumn Google will launch Google TV that’ll again be included in some TVs as well as third party boxes.
A single platform in the shape of something like Canvas makes life easy for programme suppliers and viewers, and it’s full steam ahead on that. But whatever Sky’s views on that, the flood is coming. That will hurt some parts of Sky’s business.
When Sky launched, and for much of its existance, it’s been sport and films that have been of pre-eminant importance. I’d argue that films are far less important now. There are lots of convenient and inexpensive ways to watch films from buying DVDs and Blu-Rays to services like Lovefilm. Why would I need to subscribe to a film channel?
Sport is not in that position – and hence it becomes even more important to Sky.
Imported US drama series can be watched in large chunks on DVD boxsets. Or they can be bought on iTunes. A subscription to Sky One is no longer needed to keep up with House.
How successful might Picnic be? Well – somehow – TopUp TV still survives. ITV is mulling over the idea of taking ITV2, 3 and 4 behind a paywall. That would leave Freeview a bit barren – a couple of Five TV channels, Dave and of course the BBC. But if Sky buys Five too…
This is going to be an interesting to watch play out.