Satellite broadcaster Sky will offer UK consumers an option to receive its pay TV service over broadband starting in 2018. The opens the company's potential subscriber base to millions of homes currently without satellite dishes, according to the company, and could stanch growing customer churn.
The launch of the streaming TV platform follows a similar move by US-based DirecTV, which debuted its DirecTV Now service in November. On Wednesday, DirecTV parent AT&T said the new service has already attracted more than 200,000 customers.
Sky's new broadband-only option is an expansion of the broadcaster's current Sky Q service, which feeds content from a subscriber's satellite dish to a set-top box that provides video-on-demand (VOD)-like features such as personalized recommendations and a more visual interface. Customers using Sky Q have on average watched 10% more TV compared to customers on Sky's core Sky+ satellite service, according to the company. Since that service's launch in early 2016, more than 1 million boxes have been installed in 600,000 UK homes, Sky said.
Competition from VOD services, and from video streaming more generally, is likely to have done more than just influence the look and feel of the Sky Q service. The company's second half 2016 results showed the percentage of Sky+ satellite subscribers in the UK and Ireland choosing to not renew their contracts rose to 11.6%, up from 10.2% in 2015. Sky attributed the greater churn rate to an increased proportion of broadband customers among its customer base, noting those consumers had a greater propensity to switch providers, and to the UK TV market being a "highly promotional environment."
According to Eurostat, 87% of UK households had fixed broadband in 2016, the third-highest rate in Europe; in Ireland that figure was 69%. Meanwhile, the percentage of households in Great Britain with satellite or cable TV slipped to 51% as of July 2016, according to Ipsos MORI, down from 55% in April 2015.
Sky hasn't ignored the rise of ubiquitous broadband—it has offered an online-only VOD service, currently called Sky Go, free to satellite TV service subscribers since 2006. As of August 2016, that service ranked fifth among VOD platforms used by UK internet users to view movies and TV shows, with a 21% share—well behind the market leader, BBC iPlayer at 62%, as well as trailed YouTube, Netflix and Amazon Prime Video, according to a study by RBC Capital Markets.
Moreover, Sky hasn't kept pace as subscription video-on-demand (SVOD) usage has taken off in the UK. Its SVOD option, Now TV, ranked sixth in RBC's study, with just 16% penetration among on-demand digital video-viewing UK internet users. The service, which debuted as a movie-only platform in 2012, has included a best-of selection of TV programming from Sky's satellite service since late 2013. Despite its longevity, Now TV draws only a fraction of the share of VOD-using UK internet users that imports Netflix and Amazon do, and in a market that's among the leaders in Europe for SVOD adoption.
Source: https://www.emarketer.com/Article/Sky-Adds-Broadband-Only-Option/1015124