Now that's what I call OTT

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By Ted Hall 19-07-2012

Sky’s launch of Now TV is not without risk. As a product for the post-10-million-subscribers era, it is a different kind of pay-TV proposition, one that removes the barrier of a long-term commitment in order to attract a new audience.

The allure of such freedom could be stronger than Sky intends, with cost-conscious satellite customers now presented with a more flexible alternative – still accessible on the living room TV set – that they can switch to without having to desert their long-trusted pay-TV provider.

Now TV also represents a potentially dangerous move away from the bundled approach to selling pay-TV – the packaging of popular channels with those that are less desirable – towards an a la carte model.

With Sky Movies – and later Sky Sports – now available without a basic-tier subscription, as well as on a pay-as-you-go basis, consumers are finally being introduced to the cherry-picking model they always wanted, the model operators have typically resisted for fear of disrupting the established economics of pay TV. This could lead many to question why they need a traditional subscription when the option to pay for only the content they actually want is available as an OTT alternative.

While Sky has wisely resisted any temptation to compete with Netflix and LoveFilm on price – a move that would have significantly undervalued its premium first-window content – what started out as a defensive move against the new OTT players in town could backfire if cannibalisation of its core business takes hold.

The key will be to keep Now TV on a leash. If Sky allows it to become too good, too much like its full subscription service, the operator will stand to lose a sizable number of DTH customers willing to make the OTT switch. Too much overlap between the two platforms will start to take the sheen off the appeal of the main Sky TV proposition.

In launching Now TV, Sky also finds itself in a curious relationship with YouView, choosing to distribute its content via the platform it staunchly opposed prior to accepting its eventual arrival. With both players now targeting the same free-to-air audience, and via the same device, Sky will be doing so with more of a sense of trepidation, as success for Now TV via YouView could have major implications for the way the operator delivers and packages its premium content in the years to come.