UPDATED 11:00 EDT / JANUARY 31 2012

After Losing 100k Paying Users, Sky Splits Pay TV from Satellite

It’s the age of over-the-top connected TV services, and they’re giving off a perilous aura strong enough for long-standing TV content companies such as BSkyB to engage in a major shift. BSkyB announced that they will launch their own service this summer that doesn’t require a satellite subscription. Whoa. There’s no name for the new product, or price, but the company said there will be no minimum contract and a “wide variety of pricing options” will be provided.

The new offering is expected to be available to consumers via YouView; TVs from manufacturer such as Samsung, Sony and LG; iPad etc. Allowing customers to subscribe to Sky Sports, Sky Movies and other  internet TV channels they purchase this year and in the coming years, meaning Sky is splitting its content from its satellite distribution system.

From CEO Jeremy Darroch: “It will give another choice to the 13 million UK households that have chosen not to subscribe to pay-TV. It will be a new way to reach out to consumers who love great content but have no need for the full range of Sky services.”  There will be “no infrastructure investment.”

BSkyB hinted that the upcoming service will offer Sky Movies, Sky Sports and entertainment across a myriad of devices such as tablets, mobile phones, consoles and connected TVs. Sky launched in 1990 and has started offering TV content to mobile devices through apps such as Sky Go and Sky New for the iPad. However, the new offerings were ridiculously priced and they seem to exist just to provide additional value to satellite subscribers.  At the end of the day, the strategy is still geared towards driving users to satellite subscriptions.

The advent of internet TV services from consoles, dedicated boxes, integrated connected TVs that offers a wide array of free on-demand services, as well as the low-priced over-the-top operators such as Netflix and Blinkbox, will surely overturn the current Sky service. In an announcement last Tuesday, Sky announced that their subscription has spiraled down to 40,000 from 140,000 last year. The situation signals Sky to transform its top-tier pay-TV content to pay-TV without satellite. For that, it’s safe assume that Sky is looking to rival Netflix and other streaming services.

“Beyond the near-term slowdown, structural issues are looming,” writes Bernstein analyst Claudio Aspesi in a research note. “The unbundling of pay-TV appears a direct response to the launch of Netflix, but also seems to suggest that additional growth through the old model of bundled pay-TV through satellite is coming to a natural end in its growth.”


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