Final analysis > Kate Bulkley
Digital TV Europe July/August 2010
“It is clear that Sky’s moves have upped the pressure on BT Vision to make its new sports bundle work. Thank goodness then that it is not just the Sky Sports package that BT has in its offensive arsenal.”
BT and Sky play the field In the UK, some of the biggest football
stars have moved off the field and onto advertising hoardings. But they are not pro- moting the next big sporting event. This con- test is for an even bigger prize: control of pay- TV subscribers.
The main protagonist is BT and its IPTV proposition BT Vision. The telco has kicked off a massive £30m (€25m) campaign using for- mer England footballer Michael Owen to tell the masses that Sky Sports 1 and Sky Sports 2 are now available on BT’s broadband-delivered service for the first time and at a price signifi- cantly below Sky’s.
This is an important milestone for BT. The
telco’s IPTV service is a relative newcomer – only three and a half years old – and its cus- tomer growth has been slower than BT would like with only 467,000 customers at the end of March 2010. So getting Sky Sports 1 & 2 is a big opportunity for BT to grow its market share and to offer a viable alternative to Sky. But Sky is fighting back, using its own superstar footballer Eric Cantona to tell its sub- scribers (and anyone else thinking of signing up to BT) that the rival’s offer is inferior. The intensity of the battle for the sports viewer underlines how hard BT Vision is fight- ing to get traction. It has taken years of regula- tory battles for BT (and the other UK IPTV providers) to get access to Sky’s premium sports channels at a wholesale cost that made some kind of economic sense. And that battle is not wholly won yet, with both sides appeal- ing to competition authorities. The fight-back from Sky over premium sport has been nothing less than brilliantly vicious. Not only has the pay-TV giant announced it is moving Sky Sports News behind a pay wall, thereby deleting it from the
Freeview channels that BT Vision offers to its subscribers, but Sky has announced that it will increase its retail price for Sky Sports by a whopping £3 in September, thereby pushing up the sports channels’ wholesale price to BT as well. Sky is effectively making BT’s cut-price retail offer of Sky Sports 1 and 2 even more financially negative than BT had planned. It is clear that Sky’s moves have upped the pressure on BT Vision to make its new sports bundle work. Thank goodness then that it is not just the Sky Sports package that BT has in its offensive arsenal. It is also banking on Canvas, the consortium that is planning to launch on-demand content and catch-up TV and interactive services to IPTV subscribers in the first half of next year via new Canvas- enabled set-top boxes and connected TVs. BT Vision is betting that the Canvas group will not only share the cost (estimated to be £115m for the initial phase) but provide the marketing clout and reach needed to launch a new con- sumer brand quickly. The idea is to hopefully catch the rising tide of appetite for video, online and interactive content all in one place, on the TV set.
Of course Sky and Virgin Media are opposed
to Canvas, arguing that the BBC is using pub- lic service money to skew a commercial play- ing field. They complain that the guidelines for Canvas mean that the Canvas user interface will supersede their own UIs and this is unac- ceptable to pay-TV operators who “own” their customers. The bottom line is they are protect- ing their business and the idea of making Freeview and the DTT platform more attractive is not good for their business. Canvas could be interesting because it will make the “free” DTT offer more like the pay offers and it will bring in on-demand and serv-
ices like movie buying site LoveFilm onto the TV. The downside is it is still a walled garden and it also may be confusing to consumers who will get a slightly different service depend- ing on the broadband pipe to which they hook their Canvas box or TV.
The growth of IPTV subscribers is on a roll, with subs expected to triple on a global scale by the end of 2015, but the headline forecast pub- lished by Digital TV Europe parent company Informa Telecoms & Media is smaller than the telcos would like and in some markets the growth of IPTV is looking pretty lightweight. In fact by 2015 only five countries in western Europe will have more than one million IPTV subscribers and only 4% of households world- wide will be paying IPTV subscribers by that time, says Informa. What happened to the transformation of the commoditised phone business into the multimedia bundled busi- ness that has featured in telco business plans for years?
The question is a chicken-and-egg one: BT
Vision needs to get big enough before it can afford to take the next step in its competition with its bigger rival Sky and that is bidding for sports itself as well as movies and whatever other content is going to make their TV offer sing. Yes, the IPTV business isn’t only about TV. It is about bundling services – broadband, telephony, the lot – but TV and interactive on- demand services around video are a key com- ponent to making the whole thing work. In the UK at least, it’s still at step one: getting traction. And so it’s over to the customers. Who will they choose: Owen or Cantona? ●
Kate Bulkley is a broadcaster and writer spe- cialising in media and telecommunications.
tellkatenow@aol.com.
Visit us at
www.digitaltveurope.net 40
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