Sky Europe may have overtaken Liberty Global at the top of the continent’s pay TV league, but its claim to have also taken over as number one in streaming is clearly misleading at best. It is hard enough to measure overall pay TV market shares accurately when the operators also have customers taking just broadband or mobile services, but counting streaming subs is a real black art.
There are so many different variants, such as sVoD, live streaming, TV Everywhere as part of a conventional pay TV package, broadcaster portals like BBC iPlayer, mobile TV services, video sharing sites like YouTube and social media platforms. Some of these are converging, but if we just count total number of hours viewed online there is no way Sky is Europe’s number one, even though it has been the most successful of the major operators in migrating services towards online, without cannibalizing the legacy customer base too much. In the UK Sky has claimed only 2% of its 12 million DTH customers in the UK and Ireland had switched entirely to its OTT-only offering Now TV.
Sky’s claim of streaming supremacy stands up only among its pay TV peers, not if we also include both YouTube and the SVoD players such as Netflix and Amazon. Of course Netflix can be viewed via some (increasing daily) of the pay TV platforms, which adds a further twist to the task of sizing of market shares. Liberty Global for example in September 2016 signed a multi-year partnership with Netflix, following Virgin Media’s earlier deal in 2013. That was the year Liberty Global acquired Virgin Media for $23.3 billion.
But if we look at the number of OTT-only subs held by Sky it is dwarfed by Netflix. Sky does not divulge these numbers but it is certainly no more than the 23 million Netflix has Europe-wide. In Western Europe, where Sky is confined at present to the six countries UK, Ireland, Germany, Austria, Italy and now Spain, there are now about 55 million SVoD subscribers (according to our Rethink TV research arm), of which Netflix accounts for around 42%. Amazon Video has been hyped on the assumption that all Prime members actually use video, but the true number is closer to 40%, But the great bulk of Sky’s OTT viewers are TV Everywhere customers, which perhaps when added to around 3 million SVoD customers, takes Sky to 13 million. So Sky is perhaps in second place in Europe, given that Liberty Global interests have about 9.9 million OTT regular users, almost none of them SVoD, and as long as free to air broadcasters are not counted which collectively dwarf Netflix. But Sky is not ahead in SVoD and that’s where it wants to grow.
Sky is certainly leading the way among major operators in migrating its services to OTT-only platforms, both to gain new customers through cheaper more flexible bundles in its core markets and to expand into the rest of Europe. It is also true that SVoD is only part of the picture and Sky is actually more concerned over competition from the some of the burgeoning live offerings from major players, such as Sony’s PlayStation Vue, Google’s YouTube TV and Hulu’s Live TV, assuming these become widely available in Europe (Hulu has extreme licensing issues here).
There is also the trend towards major content owners either going direct to consumers or via social media platforms, as we are seeing with some of the US sports leagues. In the US Facebook has partnered with Fox Sports to stream UEFA Champions League games on Facebook Live. However BT, which holds UEFA Champions League rights in the UK, was first to broadcast matches on a third-party platform by making the content available on YouTube in the country from January 2017. Then we have sports broadcasters such as Eurosport offering premium content effectively pay per view via day passes, which Sky has done before but for occasional one-off events like big boxing matches.
Sky’s pan European strategy though is now clear, to enter more countries with OTT-only offerings and compete at the same time for relevant premium rights, either on a local or continent-wide basis. It has just launched in Spain with a standalone multiscreen streaming service, the first country it has entered with an OTT offering alone.
This provides access to 12 of the country’s most popular Pay TV channels and at €10 a month, with no contract, is comparable to other services. There its main competitors are Vodafone Spain and Telefonica, which in July 2015 merged its pay TV operations under the brand Movistar Plus after acquiring Canal Plus Spain from Prisa. In Spain Sky is using the same streaming box made by Roku as its Now TV offerings in the UK, Ireland and Germany.
Sky Q is being promoted as the operator’s more advanced platform for future OTT-only services in its existing markets that will deliver all the channels over broadband to the main TV, dispensing with the need for a satellite dish. Initially the Sky Q effort focused on multiscreen distribution within the home of content delivered over satellite to a hybrid box that is also broadband connected. It has already brought new features such as ability to record shows onto laptops, tablets or smartphones for subsequent playback and also WiFi mesh capability through technology provided by Turkey’s AirTies. The latter has been using power-line (PLC) connections over electrical cabling as a backbone for the mesh to cater for the thicker stone walls prevalent in some European homes for example, but the plan is to dispense with this through use of suitably placed wireless Access Points.
The big step is slated for 2018 when Sky says it will make the service available over broadband only, via a new set top, effectively combining Now TV as it is currently with managed streaming delivery to the main TV. Sky is hoping to open a new chapter for streaming TV by not just attracting new customers to pay TV but also persuading them to spend a bit more on their subs than the $10 or so a month which has proved to be a sticking point so far for online services. Consumers have been very reluctant to pay more than that for what they have regarded as a second-tier service. With Sky Q the aim is to establish OTT finally as a premium offering alongside DTH, cable, DTT and IPTV. In fact as IPTV operators migrate to managed or even unmanaged ABR (Adaptive Bit Rate Streaming) IPTV is set to disappear or at least converge with OTT and cease to be a distinct pay TV service category.
For Sky then the stage will be set for convergence towards a common broadband platform with which it can take on its major competitors Liberty Global and Vodafone across the whole of Europe. However there is plenty of life left yet in DTH.