BSkyB Exec Outlines Mobile, Broadband Plans
Just over a year ago, BSkyB launched key initiatives in the mobile and broadband arenas, giving its customers more access to Sky content than ever before. Its Anytime PC service is one of the more comprehensive legal movie download services in Europe, and Sky Mobile TV is also another high-profile service which saw the light of day last year. The direct-to-home (DTH) operator has been one of the most progressive in looking at new platform opportunities outside of satellite.
Stephen Nuttall, BSkyB’s group director for business development, told Satellite Today that the operator “had exceeded its internal numbers” in terms of the take-up of these services, and that it had been “surprised” by what it had seen in terms of early take-up.
Nuttall believes that there are a number of benefits for the operator working in the mobile space, and customer behavior has not been what the operator expected.
Nuttall explained that “one of the benefits of working in the [third-generation] (3G) environment is you get minute-by-minute viewing data because it is all server-based. Some people said when we got started with Sky Mobile TV [that] you would only watch it when commuting to and from work; that is not true. Viewing tends to be high and level between 8 am and 9 pm. Some people said you would not watch mobile TV at the weekend because you have easy access to TV at the weekend; that is not true. Saturday and Sundays are the most popular days for viewing. Some people said you would only watch this for a minute or two at a time, as frankly you would only do this when you had nothing else to do; that has proved not to be true. Some channels have viewing times of just a few minutes, but there are very many channels that have viewing time in excess of 10 minutes.”
Live sports have also proved surprisingly popular, Nuttall added.
"A lot of people said you will never watch a live sports event on a mobile phone; that has proved absolutely not true,” he explained. “We experimented by showing the Football League playoffs on the mobile this time last year. We showed all the Ashes [and] Ryder Cup golf. We did a lot of experimentation. That content has proved incredibly popular. The Ryder Cup took over 30 percent viewing share over the three days it was on. Cricket gets similar numbers whenever it is shown. We have been very surprised to the extent of the demand for live sports, and that makes us very optimistic about the future.”
Such has been the success of some its content that BSkyB could now look for a different approach to mobile TV, with more long-form content becoming part of the equation.
Nuttall said “what is interesting is that on mobile TV, the general drivers are surprisingly similar to the drivers for Sky’s DTH business. News, sports and great entertainment content is something people really value and are prepared to pay for. I think that where it probably leads us is down the road of a balance of short and long-form entertainment programming rather than short snips and mobisodes in the entertainment genre. We will evolve the product and see how the customer reacts.”
In terms of numbers for its mobile TV service and expansion of the service, Nuttall commented that “on mobile TV, this is Europe’s largest 3G mobile TV service with over 200,000 subscriptions. It works on Vodafone’s U.K. and Ireland networks. It runs on Orange. It will soon launch on 3. It will roll out on other networks too.”
With its mobile TV service likely to have more long-form entertainment going forward, all eyes will also be on BSkyB’s broadband content initiatives. Nuttall believed the dynamics of the U.K. broadband market make it a strong opportunity for BSkyB.
He said “the consumer is demonstrating a willingness to transact online using credit cards [to a point] that is remarkable in any international context. The result of that is that 12 percent of advertising revenue is now spent online. It has overtaken radio and the national press as a medium, which is very impressive. It is a very high percentage which, I believe, is unmatched anywhere in the world. The U.K. is a very interesting market to be a player in.”
He continued that “if you look at Google, they break out the revenue they make in the U.K. when they put their statements out to the stock market, because the revenues they make here are so significant. It is the only market they individually identify as well as the U.S. The online economy in the U.K. is flourishing.”
Its partnership with Google could be a sign of things to come, Nuttall says. “We announced a big strategic deal with Google last autumn, which revolves around three things: search, communication and online video.”
Nuttall hopes the partnership with Google will lead to a number of new innovative services. He said “Google [is] looking to find new ways to sell TV advertising, even. In the U.S., there are stories about Google selling advertising within linear channels. If you imagine in the future a household that has a broadband enabled Sky+ box, you could be swapping out advertising that is either delivered over broadband or which is sitting on the hard drive. So you could change the advert depending not just on the show, but the audience and the time of viewing. So, for example, you might record a Sky One program but you choose to watch it on a Saturday afternoon. You might watch a program weeks after transmission. So you can change the advertising. There is an awful lot you can do by locally serving advertising or by delivering more targeted advertising.”
Interestingly, Nuttall believes IPTV operators in the U.K. could struggle. “From the data I have seen, the infrastructure in the U.K. does not seem to be especially well-suited to IPTV at this point in time, at least in terms of a linear TV service,” he explained. “For one-time, on-demand services, the immediate potential is much clearer to see, as with our Anytime on PC service. There are issues with the length of the run of copper from the exchange to the household. There are issues around the quality of the copper that was actually put in the ground. There are issues around the interference with other services as well. It would appear that the problems faced in the U.K. are not faced to a similar degree in France or Spain where the networks were built later, and perhaps in a slightly different way.”
Omar Sheikh, a media equity analyst at Dresdner Kleinwort, thinks BT could emerge as a significant competitor to BSkyB. He said in a research note that “in particular, we continue to see BT Vision as a formidable competitor for Sky’s existing and potential non-premium customers. For Sky’s existing customers, the existence of an equivalent triple-play alternative to Sky’s product from a trusted brand like BT will be an attractive option, in our opinion. This will particularly be the case for disgruntled customers, who have just come off a viewing-package discount and want a PVR but do not want to pay the upfront 99 British pounds ($203) fee for a Sky+ box.”
Sheikh also wondered what impact broadband will have on BSkyB’s overall subscriber proposition, and that more will need to be done to reduce the churn figure.
Sheikh added that “we would argue that with multiple cheap broadband offers available, now bundled attractively with television and a free PVR by BT, it is hard to see how broadband on its own will really, sustainably differentiate Sky in the market. We would argue that the triple-play bundle will enhance customer loyalty, but that this impact would be surpassed by the impact of Sky’s offering differentiated hardware. We believe that the combination of a larger Sky+ box subsidy, combined with the triple-play product offering, would significantly reduce churn and help achieve the group’s medium-term target. Without differentiated hardware, we believe the ‘around 10 percent’ churn target will be much more difficult to reach.”
The demands for bandwidth and increasing demands of the home for entertainment pose a number of challenges for operators such as BSkyB. It seems that even though it is moving into other areas, the role of satellite technology will be as crucial as ever.
Nuttall said “you can imagine a family household could well need well in excess of 100 [megabits per second] (Mbps) for video. That will go up. It is a heck of a challenge to deliver that on a one-to-one basis, because the line from the exchange to my house cannot sustain 100 Mbps. It is not entirely clear to use that one-to-one is the way to go for very popular content that everyone wants to watch. It seems better to broadcast that and combine it with local storage. There is clearly a need for the one-to-one IP pipe. But we think that is best suited for communications needs, and also for accessing the long-tail of video programming, so not the most popular video content. So, the Sky model in the future combines local storage in your Sky+ or your PC with satellite delivery for the most popular content and an IP pipe for the more niche content and communications. We think that is a better answer than trying to do everything over IP.”
BSkyB is rightly seen as an innovator in the digital TV space in Europe, and over the next year the traditionally satellite-based operator will continue to diversity away from its roots and put more pressure on the BTs and Virgin Medias of this world. Nuttall said “the focus for the future is that we are in a world where we are delivering services through satellite and broadband and mobile. We are in a world where we are offering an entertainment experience across multiple devices. We are in the communications space. We are a big player in telephony. We want to do messaging as well. The challenge for us is to try to find ways to interconnect those services so they all work together really easily, seamlessly and in a very natural way just like your Sky+ box does. We would like to combine these services so you get the same effect that you do with Sky+ where people say they have got that and it has changed their lives. So it is the integration of all of those things – which is no mean task – where we are trying to get to.”
Nuttall believed BSkyB’s approach will find favor with customers. “We think a truly integrated converged offering across entertainment, communications and multiple screens is going to be something that existing customers will value enormously,” he said. “It will make them more likely to trade off. It will also make choose people BSkyB over other options.”