TV, the Second Coming?

The Guardian believes it is Sky’s most significant strategic move since broadband, but does the launch of Sky Now TV, a pay as-you-go internet TV service, signify a new era of how we consume TV? VINDICO’s James Grant looks at the significance broadband providers will have in the battle for online content distribution and the impact it will have on the advertising industry as whole.

The past weeks has seen the launch of Sky Now TV, a service offering consumers over 600 Sky movies and 11 pay-per-view channels through the home TV, PC, Mac, laptop or smartphone. Aimed at the 13 million households that do not currently subscribe to a paid TV service, Sky has created a more complex and competitive TV market, seemingly overnight.

We are consuming content via the Internet at a staggering pace, with the average UK viewer watching 268[i] online videos per month. It seems only natural therefore, to take TV straight to the heart of the household access point – the Wi-Fi router.   Commercially acknowledging the change in consumer viewing habits means that Sky has left the broadcaster stable – joining the increasing list of infrastructure/technology providers who also offer content.

From a strategic perspective, this move to a new form of content distribution is very well timed for Sky: the business is expected to post results showing a slowdown in customer adoption of its subscription service. But the real wild card in the space is BT. Years ago BT was not even considered a key player in the combined broadband and content space, yet recently the company announced it has bought the Premier League rights for a bargain price of £246m per season for the next three years – overnight the business formed a significant household offering combining technology and content.

Despite the competition from BT, Sky still chose to fork out £760 million for the Premier League rights, demonstrating the significant value of live sporting content for live advertising opportunities. It’s safe to say therefore; when Sky and BT tie their sports content into their broadband offerings the delivery point will become the vital battle ground in the home.

So will Sky’s new venture succeed and will consumers adopt it? Well this year the proportion of adults expected to watch live TV content via a PC, tablet or laptop was around 7%[ii], which we expect to shoot up when BARB release its latest online figures later this year. Furthermore, the latest figures from the BBC revealed over 1.7 million[iii] people access BBC iPlayer on a daily basis.  It is clear from these stats alone that consumers are becoming more and more inclined to break away from the TV schedule, preferring to choose from a more diverse content list, when, and where they like.

At the same time however there is still a large chunk of the population who are happy to remain technophobes, with only 17%[iv] of us now owning an internet ready TV set and those that do, rarely using them to go online. And while Sky might have made the first step in the demise of the TV schedule, it isn’t going to happen overnight.  Stats published last year by BARB, showed that over 90%[v] of us watched content as scheduled, with an average of 24 million[vi] people watching prime-time programming from 8pm to 9pm.

Nevertheless by acknowledging the change in distribution methods, Sky Now TV has an opportunity to define a new set of opportunities for advertisers. With viewers having more control over their ‘watched content’, advertisers and brands will have a much better idea of who and what their target market is viewing and how best to deliver ads to them. We might even see brands and publishers who are brave enough to let households have a choice over advertising as well.

Content distribution has never been so relevant and with the help of broadband providers such as Sky and BT, we are gradually becoming a ‘creating generation’ with the ability to pick and choose content at our leisure.  As we see more services such as Sky Now TV launch over the next year or two, the delivery point is going to become a heated battleground with broadband providers fighting it out for the best content. The TV schedule is far from dead though and it might be a while before consumers realise the potential of services like Sky Now TV but one thing is clear – the screen content marketplace is going through a period of disruption right now, add in the battle for distribution and we are set for some exciting changes as consumers, and equally exciting opportunities for advertisers.