Sky strikes Liberty Global with Swiss sports OTT launch

Sky Deutschland has given the board at its new partner UPC, part of Liberty Global, some major strategic thinking to do, as the company announced the launch of a dedicated sports OTT service in Switzerland this week. It is another clear show of intent from the German pay TV operator – and the Sky group as a whole – for pinning a core part of its future business on delivering sports content over the internet.

The service, set to launch next month and nameless as of writing, could be destined to launch in most European countries where Sky does not yet have DTH operations. It could even have the potential to be as big as Discovery Network’s Eurosport in a few years – which is pushing an estimated 1 million subscribers since being rejuvenated under Discovery ownership.

The battle for Bundesliga (German top soccer) rights is a key factor in the financial outlook of the OTT opportunity in Switzerland, rights which are in the hands of Sky Deutschland. However, Sky Deutschland does not have any direct DTH presence in Switzerland, but its channels have been distributed by Swisscom’s pay TV subsidiary Teleclub via satellite, cable and IPTV for years. This long term distribution deal had included Sky’s sports channels with Bundesliga matches, until earlier this month when UPC snatched these valuable rights assets – leaving Swisscom’s Teleclub out in the dark.

This marked the end of a long standing partnership between Sky Deutschland and Teleclub, but Teleclub then sought sports rights elsewhere by signing a deal with Discovery for Eurosport content – but covering just 45 Bundesliga matches. It’s worth noting that one of Discovery’s largest shareholders is Liberty Global’s Chairman John Malone, who owns 28% of Discovery.

While UPC will have exclusive rights to show the majority of Sky’s Bundesliga matches, the new OTT service will also be showing the same matches – a dagger in the heart for UPC after it must have been cheering the act of stealing away some of the most desired rights in Western Europe from its chief cable rival.

Perhaps UPC should not be so surprised, as it is characteristic of Sky to barge its way into a market it had minimal presence in – doing so with a forward-thinking, DIY mentality.

Since acquiring Eurosport, Discovery has used its rising revenues to go after local core sports assets, and has turned itself into a sporting success overseas. Today it has soccer rights in Germany and other parts of Europe, as well as Switzerland, lifting its viewing figures – and ad rates – dramatically.

Eurosport is now Discovery’s crown jewel in Europe, boosting Discovery’s revenues by 10% in 2016, and Eurosport viewership was up by 23% in the fourth quarter of last year. Eurosport also gained hugely from the decision by regulators in Germany to stop the Bundesliga, which sells soccer TV rights, from having a single buyer, which had favored Sky in Germany.

We suspect then that Sky Deutschland will take a similar route by partnering pay TV providers in countries where it does not yet operate, buying cheap rights to minority sports, from where it can demand extra revenues, or eventually launch a dedicated OTT TV service in these countries once it has built up a following.

The new Swiss sports OTT service could be priced similarly to Sky’s current sports streaming package for its Now TV sports offering in the UK – costing £34 a month or £7 a day. Having said that, the Premier League rights are more valuable than Bundesliga, meaning the pricing for the Swiss service might be lower. Either way, the launch will eat away at those consumers who are only clinging on to a UPC cable TV package purely for the Sky Sports content.

News of the imminent launch coincided with an announcement from Sky Deutschland that it had selected dynamic ad insertion technology from Yospace, a UK-based company which Faultline Online Reporter conveniently talked with just last week, following its contract extension at BT.

Yospace is supplying its DAI platform for Sky Deutschland’s Sky Go service, but we are awaiting confirmation if the deployment will also cover this week’s newly announced Swiss OTT service – which arguably would be an even bigger deal for Yospace.

The Yospace platform works by stitching in replacement ads to multi-platform services, in a way that it claims seamlessly replicates original broadcast channels, while allowing full addressability so that the relevance of the ad to the user is enhanced.

Its server side ad stitching also helps beat ad blockers and delivers programmatic ads across multiple streaming protocols, while also providing ads that cannot be skipped.

“Dynamic ad insertion empowers us to monetize Sky Go’s reach. It isn’t considered in linear TV AGF ratings, but represents a growing part of the total reach of Sky live sports events. Besides, it offers targeting opportunities and exact measurement that is far more sophisticated compared to TV. Yospace happens to be an innovative technology partner that can even handle peaks like Bayern Munich vs. Borussia Dortmund reliably,” said Boris Haug, VP Product, Brand Solutions & Operations of Sky Deutschland’s advertising sales subsidiary Sky Media.

Tim Sewell, CEO of Yospace, added, “This announcement marks an expansion of Yospace’s involvement with Sky, having worked with Sky in the UK since 2015. We are delighted to be adding Sky Deutschland to our growing list of major broadcast customers around the globe.”