For Digital News September 2000 John Swingewood By Kate Bulkley

John Swingewood, 44, has been Director of New Media at BSkyB since October 1999. Prior to Sky he worked at BT for a total of 25 years, including two years as the director of BT's 500 million pound Internet and Multimedia Services division. He joined the BT Broadcast unit in 1991 and became GM in 1993, where he helped turn the group into a 250 million pound global business.

John's early career included the launch of --at the time-- experimental X25 data services and the development of network and service management standards and tools. He then established BT's system integration division in the UK, specialising in credit card authorised systems, airline cargo EDI, and X400 communications networks. John, who restores classic cars and enjoys sailing, holds a first class Honours Degree in Electronics from Surrey University.

Q. You are the head of Sky New Media. How do you define your role?

A. Until I joined, Sky was really about being a multichannel television company. My role is to turn us into a multi-device, multi-platform company. So I want the Sky experience to be not just on the TV, but one you can have on a PC, be it Skysports.com or Sky.com. And if you are on your mobile phone and you want the football results you can use the Sky mobile portal to get those results. Clearly there are different bandwidths today and we are very much narrowband but as broadband comes in, the experience we have in video wil come into play. And in the UMTS (multimedia mobile) world we will also be able to bring our content to play. So it's really moving Sky from being TV to being a multi-service and multi-platform company.

Q. The interactive platform for Sky TV called Open... started out as a venture only a quarter owned by Sky, along with partners Matsushita, HSBC and BT. Recently Sky bought out everyone except BT giving Sky about 80% of Open.... How do you see Open... services fitting into Sky's New Media plans?

A. The main reason we took control of Open... is because it has become very successful. I would say it's probably the largest e-commerce platform in the UK. For example it's accessible by about 9 million people. In fact in June 1.6 million homes used it. And we are now at a million e-mail customers. So there are impressive statistics coming from it.

Q. Did these 1.6 million people actually buy things on Open... or were they just cruising through?

A. There is always a certain element of cruising. Part of the service is creating something that people can browse. But companies like Toy Zone and Gameplay sell more products on Open... than they do on the Internet by a substantial amount. So it is a very effective commerce platform. And I think part of that comes from the television (experience). People have had a television in their living rooms forever in many cases and people trust it and know how it works. I'm not sure we are quite there yet with that same level of trust in the Internet world and with PCs.

Q. How will you integrate Open... technology and the WML (mobile phone browswer) technology you plan to launch so that certain of the Sky TV channels will have enhanced services like e-commerce? Today using the Open... service means I leave the TV environment and go into what some might call the netherland of Open... services, which some people see as a handicap.

A. I think that what you are going to see is an absolute integration of all of the activities. So whether you're in Sky News interactive or Sky Sports Extra which are interactive programmes or if you are in the Sky Text product which launches shortly, or in Open... or using the on-line features that WML offer us, we will create a uniform expereince across all of that. So for example, you could bet whilst watching television. Or you could bet while not watching television. The choice becomes the viewer's. And we will ensure that that the whole experience is seemless across all the platforms. You'l be able to go from Text to Open..., from Open... to pictures, (and) we will allow commerce around certain programmes.

Q. So there will still be two environments, i.e. Open... and then the enhanced TV made possible with WML?

A. I don't see them as two environments. It will really depend if the broadcast channel is part of that experience. There will be people who will watch a programme and do their e-mail. I think there are some people who will want to shop in that environment as well. I think there are others who will want to go off and play games or get in-depth information about restaurants, or they will want a deeper experience with a retailer, and they will use Open... for that.

Q. Some peope say that WML is not very robust. It's designed for mobile phones and so it has a limited capacity. So why have you picked WML?

A. WML is an important development for us. What it has achieved is we can run interactive, on-line applications whilst continuing to watch the broadcast stream. And we can do it very very quickly and very very cost effectively because the application that has been developed is bog-standard, as it were, in the WML world. There are a lot of people deliviering those sorts of (WML) applications. Also, if you think about what you want whilst you're watching the televison, you want a relatively simple application running below that programme. The mobile phone and the (TV) remote control have a lot of similarities in terms of the control features. Those (people) that have seen us running a variety of WML applications whilst watching the television, recognise that there is a very good fit between those two technologies.

Q. When do these WML applications roll out on Sky and what applications will we see first?

A. They start this November (2000). The first applications will be e-mail and betting. But the interesting thing is the speed we can roll out new applications. It's very, very fast. If that WAP application exists it will work on our set top box. For example, an e-retailer with a WAP application, subject to the right commercial terms, can launch very quickly.

Q. So these servcies could end up being quite a hefty revenue stream for Sky. How quickly will we see that happen?

A. It will run on a similar business model that Open... runs today (commission strtucture). And for just this (financial) year we will see betting revenues (using WML) in excess of 100 million pounds. This is quite substantial for a new business. You also have the revenues from Open... which is growing apace. We've got increasing revenues coming from the internet properties, both the sports sites we bought into like Chelsea Club and also the Web sites we programme on behalf of the Clubs. They're all starting to generate both advertising, betting and e-commerce revenues around the merchandising. Which is why we're also launching in the month of October Sky Sports Store. It will be one of the most, if not the most, comprehensive sports store on the Internet.

Q. So the Sky Sports Store will be for the football clubs' merchandise?

A. Yes and also for the Sky Sports sites as well. And it will be on the television as one of our e-commervce partners for Open... and for WML products.

Q. Sky spent over 300 million pounds to purchase the Sports Internet Group, many thought it a high price. How is SIG going to fit into your overall plan?

A. The SIG for us gave us three things. First, it had a relationship with a nu mber of football clubs to programme their web sites. This will help us to become the number one sports site on the Internet. And the technology that was there to enable that programming was also very important to me. Secondly, there is a company called Opta which produces statistics about football matches. It measures the characteristics of every single player in the Premier League: who's the best passer and who's the best defender. This is original content and I thought it was important to have that on our Web sites and to make that content available to the Club websites as well. And then we use that same content via our television programminmg. And thirdly, there was the betting component to SIG. There is both an on-shore and off-shore betting license and operation. For me the two biggest revenues from on-line sports is from commerce, which is why we are launching the Sky Sports Store, and the second revenue stream is from betting. So what we've done is taken an ownership of the two main revenue streams coming from our on-line activities. But we also realise they have synergy with our television activities, in the sense that being able to bet while watching football is clearly an application that lends itself to that WML service.

Q. So I guess it was pretty important they Sky won the live Premier League rights?

A. Well, I think it was really quite important that we won them. (editor's note: Sky has secured a three-year exclusive live Premier League football TV rights from next season for 1.1 billion pounds)

Q. How does this WML technology work. Will you download it into the "old" set top boxes or will you have to roll out new boxes?

A. The beauty of the WML solution is that it loads in an automatic software download from the satellite. So we don't need to re-visit the home. We don't have to send out another box. We don't need to worry about getting the telephone line connected because we did all that when we put the first boxes out. Every single Sky box already has a telephone connection. Sky did a lot of planning in thinking about how the future would evolve. Every single box is on-line and is e-commerce enabled. When I download that WML I have just complimented Open... Open gives you a deep, rich and consumer experience but without the broadcast stream. Now we have complimented that with the simpler solution that also allows you to watch television. The next thing is how to network that box into an ADSL (Asynchronous Digital Subscriber Line) home. We have a solution for that. We haven't announced it yet, but we are working on it.

Q. So a user will be able, in the future, to download some software and add a little technology sidecar to the current box to allow ADSL (broadband) access?

A. Yes. We have new generation boxes coming at Christmas this year (2000). We will add a premium box. I haven't, or Sky hasn't, announced the comercial price yet, but there will be premium boxes available.

Q So a Sky customer will be able to choose to buy a premium box. And why would I do that?

A. You can choose to buy a premium box and pay for it. You might want it because it will have a hard disc in it and is a very sophisticated video recorder as well. The next generation takes TIVO functionality, enhances that further and puts it into the current set top box. (editor's note: TIVO is technology that allows the set top box to record and store programmes by genre or by past viewing patterns. Sky has a commercial agreement with TIVO of the USA to joint market these boxes in the UK) Our normal (current) box will remain as it is but with an extended capability through WML and with, as you said, a little download and a sidecar so that it will be DSL-network capable. So when the pricing opf BT's DSL network becomes realistic this opens up the opportunity for all sorts of video on demand type services.

Q. The cable network operators say that two-way, broadband capability is something they will do better. Yet both Telewest and NTL have had their problems launching digital services. So does Sky have a window of opportunity?

A. Sky's always adopted a leadership position in terms of technology and innovation. And you will continue to see that. I think that the home of the future is going to be different from today. It is going to be a multi-screen home and I am thinking about how Sky exists in a multi-screen environment with sevices on TV screens and content to PC screens. So we have to manage that in a hybrid satellite-DSL environment. And we're very comfortable with that. That is a very clear path forward for us.

Q. But people say that broadband cable is a much more robust system. I grant you that Telewest's recent problems in getting flash-memory cards for its cable set tops boxes has put it behind its own schedule. And NTL has been slower getting digital cable rolled out than originally planned. So UK cable is having a hard time getting its two-way act together, but they will and my question is does that worry you at all?

A. No I don't think it worries me. We are installing dishes at the rate of one every 15 seconds at the minute. The consumer demand is now. We have a great product and we'll have 7 million satellite homes by 2003.

Q. And of course by December 2001 BT should have opened up its phones lines for DSL and that should add about how many more homes for Sky?

A. We have a joint venture with Kingston Communications up in Hull and we are experimenting on this type of (ADSL) service at the moment and delivering the whole range of PC and interactive services over copper wires to the home. For us this is not a replacement for satellite delivered services, it is purely compliamentary. We see a hybrid of DSL and satellite delivered services.

Q. Let's talk about useage of these interactive services. I know you have recently launched Sky News Active (an enhanced TV service for Sky News). What kind of useage are you seeing of this and the other two-way services?

A. I don't have to hard numbers on Sky News Active but I do have early feedback, which is that people love the ability to come in at any time of day and get a five minute news summary. And I can tell you on Sky Sports, during a Premier League match on Sky Sports Extra, I think it is about 50 percent of all viewers that have Sky Digital, use Sky Sports Interactive. They like the stats, or if you come in late you can see the first five minutes of the game or you can get highlights up to that point in the game. That is really what Sky Sports is about: empowering the viewer. We want to give the viewer the choice and that is why, coming back to (why we are launching) WML, we're saying you can shop while you are watching the broadcast, or you can shop Open... without watching the programme.

Q. So all that is left is for Sky to be on mobile phones?

A. You can bring up Skynews.com and Skysports.com on your WAP phone now. It's quite interesting we have only had the WAP service up for a month (editor's note: Kate's interview with John took place on August 8, 2000) and we haven't really promoted it and yet we have a huge number of hits on Sky WAP mobile. I am staggered by how much use there has been.

Q. How much exactly?

A. We did close to three quarters of a million page impressions in the first month, without advertising and marketing. Which is just incredible. That is realising the ambition really of creating the Sky experience on the television, on the Internet and on the mobile. For example, most of our traffic to our Internet sites, quite unusually for consumer Internet products, is during the day. We are seeing big peaks from 9 in the morning to 6 or 7 at night. People are accessing Sky's Internet products when they are not watching Sky television.

Q. According to one analyst at Morgan Stanley, Sky News Media is expected to have operating lossses of about 40 million pounds in the next fiscal year. So is that an accurate figure and what will you be spending on your new media projects?

A. That number would exclude Open... I think. I don't actually recognise that number (40 million pounds) but what I can say is that we are investing substantial sums. Not in the traditional dot com way of spending money on marketing because we don't need to because the Sky brand shines on its own. So the money is going into acquiring exclusive content and building the infrastructure and investing in some of the e-commerce companies that we think are important for us going forward, like Gameplay, Letsbuyit.com, commerce partners that we think bring something to the Sky community.

Q. So what is the budget for Sky New Media?

A. I don't want to tell you that.

Q. Sky has moved up its analogue turnoff date, how will the earlier turn-off help the whole of the UK TV populace make the transistion to digital TV?

A. Our target is 7 million homes by 2003. The ability to turnoff analogue signals in the UK is not just dependent on what we do of course. We've made very clear that we are going to switch off our analogue service next year in June (2001) and we are aiming at 7 million digital hoems by conventional satellite by 2003, so that's our plan laid out and it's for others to do thier bit really.

Q. I guess what I mean is there are people like me who have more than one TV set. If I am not willing to go and buy a new digital TV set and I already have my Sky box on one TV what about the other sets? Is there another option than just getting another Sky box?

A. That problem or that situation offers opportunities, because it means we can sell more services into that home. I alluded to this earlier when I said I see in the future homes having multi-screens-- that's multi-televisions and multi-PCs-- and clearly we have to address that requirement. That is something that I am working on and I'm not in a position to eleaborate on our solution for this but it will be coming soon.

Q. On a different note then, Sky isn't really an ISP (Internet Service Provider) yet you do have an e-mail service, what is the strategy there?

A. We do offer an ISP service called Sky Now. But our focus is on developing Sky.com and Sky sports.com as great destination websites rather than focusing on the dial-up access business.

Q. Right. Because that is getting commercialised.

A. Yes, it is and all those guys have gone free (free ISPs) have suffered huge quality problems. We decided to focus on what we are best at which is producing good content.

Q. So what is your biggest hurdle going forward at Sky New Media?

A. I think that the networked home is a challenge, which we are addressing. I think you are going to see us thinking about how to get our content more aggressively in the mobile world. We have a number olf WAP initiatives now but I am thinking much more about UMTS. And I hve a vision of interactive programming, Sky Text, WML on-line, Open..., all being a seemless service that you can jump in and out of, all with a consistent navigation and a consistent look and feel.

Q. Given your long years at BT, some 25 years, how do you see Sky's relationship with BT developing?

A. We see BT as an important partner but they are not the only partner. We think that certainly inthe DSL world they look like, well they are rolling out there DSL product and we think that their DSL product is at this point in time too expensive. We do need to see how committed they are to taking an aggressive position but they are not the only partner that we could partner with in that space. As I said earlier we've already partnered with Kingston in the Hull area and we have set some very very big ambitious goals in Hull and delivering very sophisticated servcies.

Q. And of course once the local (telephone) loop is opened up, Kingston could launch a national DSL service as a virtual network operator.

A. It could and I think that the whole unbundling of BT's local loop is something that I look at very closely.

Q. I've sort of asked you this before but don't you worry that once the cable guys get their broadband act together and their two-way pipes working they will be a huge threat to a satellite-delivered technology like Sky?

A. You use a couple of words there: when they get their act together. So I don't believe that the technology is necessarily the biggest advantage. It is about the whole customer service proposition. It's about hte compelling content and it's about really being close to your customer. The underlying technology is less and less important. I think as we see DSL services and see flat rate tarriff possibilities and our set top boxes being lon-line all the time I don't think there is any huge advantage for cable. There is a disadvantage in that there coverage area is still limited, whereas we already have national coverage.

Q. Some people, inlcuding me, have called your EPG ugly and clunky to navigate, for example you can't easily access a page you have just left. Are there plans to upgrade it?

A. We continue to upgrade the EPG. We upgraded around the movies last week so you can search by time of day, by A to Z and by genre. So we will continue to improve it. It remains a regulated service though so there is only so much you can do with it. The EPG has to be completely open to everybody.

Q. So how do you use your technology?

A. I have a WAP phone and I have a broadband connection at home, probably one of the first. It was installed last night. It is a BT DSL. I've been wowed by it but I have only played with it for about an hour. But I mean 500 kilobits for myself is fun. And I am a Sky Digital customer as well.

Q. Probably not through cable, right?