Friday, October 23, 2009

Taking On Sky

BSkyB is steaming ahead gathering new customers and getting existing ones to pay more, as their results today show. They seem to have a coherent 'tv everywhere' strategy, despite the poor performance of their internet TV offering. It is staggering that, in the face of the worst recession the UK has known, people are paying Sky so much for services which are largely available for free elsewhere.

It shows just how compelling TV is as a medium and how even more compelling features like one click and predictive recording are (but there again, you could do that with a £100 PVR from Tesco).

What is the secret of Sky's success. I believe it's their marketing, which knocks spots off Virgin Media and BT, along with, inevitably, their virtual monopoly over popular sports.

So, what can competitors do ? Well, ITV (and indeed the other channels involved) could decide to put some money behind Freeview and put together an aggressive consortium of hardware vendors who get no business from Sky.

Alternatively, and this is already happening, the hardware vendors themselves can come up with a box even more compelling than the Sky+ box and content that's more compelling.

Or, you could go about tackling the market a piece at a time by offering niche channels and marketing them to their related communities (for example a cycling or railways channel); this is certainly the best option for OTT (over the top) box vendors.

But it's salutary that in the US newcomers like Verizon and AT&T have established successful TV services whilst Tiscali TV and BT Vision have struggled badly in the UK. The main selling point in the US was fast net connection, which is what Virgin offer in the UK, but they have singularly failed to communicate the benefits of their on demand and fibre services.

But it's difficult to see anyone really threatening BSkyB's position in the short term.