When will the internet kill Sky?


SkyFor two decades now Sky have been one of the biggest forces in British broadcasting – not only do they control most of the largest satellite TV channels but they have another trump card: they own the platform too. Being the people who control the satellite dishes is Sky’s – and indeed Rupert Murdoch’s – cash cow. Regardless of what you watch (and thus, what adverts you’ll tune into), Sky are still getting your monthly subscription fee.

With ten million subscribers in the UK, they are a force to be reckoned with – but could Sky’s dominance be challenged by the our rapidly changing new media landscape?

For the past few years we’ve seen services like Netflix, LoveFilm Instant and YouTube – amongst many others – take our eyeballs away from old fashioned ‘linear’ telly (where you can only watch what is on at the moment), and instead we now spend huge amounts of time watching stuff on demand.

Sky aren’t stupid – they haven’t just let this erode their influence. Seeing these new challenges Sky have launched their own on-demand platforms and apps – making programmes available on apps for everything from iPhone and Android to Xbox and PS3 – and have started the slow process of getting Sky boxes online so they can supply on-demand programming via the internet, and not just leave customers to the mercy of linear TV delivered via satellite.

What’s interesting about this is that bit-by-bit, a big shift is taking place in who has the power. Whereas a few years ago, if you wanted more TV, you had to get a satellite dish (or cable), as that’s the only way it could be delivered. Now content can be delivered over the internet, Sky risk becoming just another content provider like Netflix. Sky is no longer the conduit to all of your television – but now merely a choice amongst many.

This is important because it gives consumers less of a reason to stick with Sky – if times are tight or they fancy a change, then losing Sky isn’t such a big deal. Could the cash cow be heading towards the abattoir? It explains why Sky have been so aggressive in growing their broadband users (currently around 4 million) – so they can be relevant again.

It’s not all doom and gloom for them though – what keeps Sky relevant is sheer force. They do, after all, have ten million TV subscribers giving them lots of money to try and plan for a multiplatform future. This cash also means that Sky have been able to continue to secure the best content deals for themselves – it’s why all of the vast majority of football matches are on Sky Sports, and why Game of Thrones is on Sky Atlantic. Sky also have big exclusive deals with all of the major film companies – which explains why apart from a few gems, Netflix’s film catalogue is more Try Hard than Die Hard.

It’ll be interesting to see what happens when these deals expire and have to be renegotiated. With Netflix, LoveFilm, and even Blinkbox vying for the big deals, it’s going to mean the film companies can charge a much higher price. Look at how BT – another new on-demand player – were able to snatch football rights away from Sky.

So for the time being Sky are still dominant and powerful – but are they sitting on a ticking time bomb in an industry that is changing so fast?

James O’Malley
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