Traditional broadcasters like ITV and pay TV companies like Sky are fighting threat from over-the-top content providers

When BSkyB announced its most recent quarterly results, the pay TV giant was eager to link its growth in subscriptions to connected TV, revealing that it added nearly 600,000 new connected TV boxes in its latest quarter. There are now more internet-connected TVs in UK homes than ever before and the numbers continue to rise.

Indeed, internet-connected TVs are expected to become mainstream, expanding from 10% in 2012 to 50% of all households in 2020, according to Enders Analysis. Enders also forecasts that internet-connected viewing – on smart TVs, PCs, smartphones and tablets – will rise from 1.5% of total viewing today to 5% by 2020.

As services like Netflix gain credibility with consumers, broadcasters must rethink how to make their programmes available to viewers without undermining their traditional business models. All new TVs sold today by Samsung, Sony and the other big TV manufacturers have the ability to connect to the internet and come pre-loaded with apps like Netflix and the BBC iPlayer as standard.

IHS Screen Digest TV research analyst Guy Bisson says Netflix and other over-the-top (OTT) services pose a "dire competitive threat" to pay TV operators, which could lose their subscribers to lower-cost internet-delivered services available on a variety of devices.

Of course, the answer is to fight back, or as Bisson puts it, "by making pay-TV less TV-centric – ie, allowing access on tablets, laptops and smartphones, and enabling TV to be moved around the house and on the road – multiscreen becomes an attractive alternative to OTT".

The move to multiscreen is certainly being embraced by Sky, which revealed last week that 2.3 million of its customers now have internet-connected Sky+ HD boxes, up from 600,000 a year ago. Once connected, Sky customers enable other devices like tablets and smartphones, allowing its paying subscribers to watch a variety of on-demand content from Sky Movies films to early viewing of the hit US series Hannibal before it is screened on its Sky Living TV channel.

According to Mintel, online consumption of movies (digital downloads, subscription streaming and video on demand (VOD) transactions) has more than quadrupled in the past five years and the trend is set to continue as faster broadband services are made available to more homes across the UK. The good news for broadcasters is that on smart (connected) TVs the most popular apps are the broadcasters catch-up TV services, led by the BBC iPlayer, ITV Player and the 4oD, according to research from Mediabug, part of Decipher. But the on-demand OTT services – Amazon's Lovefilm, Netflix and Tesco-owned Blinkbox – are not far behind.

Sky said that during the first three months of 2013 an average of 45,000 customers each week connected their Sky box to broadband. "We know that customers who use our connected TV services watch more of our programmes and really value it," says Luke Bradley-Jones, Sky's director of TV products.

Sky will continue to push customers to connect their boxes before BT's launch of its new sports channels this summer, which is seen as competitive threat to Sky. BT has spent more than £1bn buying sports rights including the English Premier League to attract subscribers to BT's TV and broadband service delivered through a YouView connected TV box.

The battle lines have been drawn and the fight for customers is set to ramp up. "There has been an assumption that we are moving into an OTT world but the power of a really good personal video recorder (PVR) trumps on-demand TV every day of the week," says Nigel Walley of Decipher media consultants.

The key to making a PVR win against OTT applications, says Walley, is to turn it into a home media server with multiple tuners that can access video content of all flavours on any device the consumer wants, something that both Sky and Virgin Media are testing. "The new set-tops boxes that are coming all have six to eight tuners in them," explains Walley. "This means that you can have full control of your TV service on any device and it means that the TV everywhere promise is coming to life."

The move to multi-tuner boxes will see the emergence of "multi-room services on crack" led by the pay TV operators but followed more slowly by Freesat, Freeview and Youview, all of which are keen to jump on the TV Everywhere bandwagon. "All the platforms are talking about multi-device mobility around the home and the land grab onto every TV," says Walley.

Articles Menu

Home