Fight the beeb, not yourselves.
For as long as I can remember the UK cable industry has been trying to prove that Sky has been leveraging its exclusive content to gain an advantage in distribution. Historically, this has caused numerous long investigations and several remedies have been applied. Today, Sky has probably less exclusive content, especially in the Sports area, than previous and certainly has nowhere near exclusivity on general Entertainment or News channels.
Virgin Media should sit down and think long and hard the real reason why BSkyB thought that value of their programming had fallen over the last few years. I would argue that is because the BBC, ITV, Channel 4 and Five have all launched lots of new channels which are relentlessly cross-promoted on their main channels and have higher viewership figures than either the Sky or Virgin Media channels. In this environment it is hardly surprising that BSkyB think the Virgin Media channels have dropped in value. The only solution to this problem is for Virgin Media to improve the appeal of their channels and gain viewers – it is a long and difficult road that Virgin Media face in the content arena competing against the Public Sector Broadcasters.
However, this doesn’t account for the fact that Sky wanted to raise the price of its channels to Virgin Media despite Virgin Media stating the Sky share of viewing had also dropped over the previous year. I can see why Virgin Media didn’t want to pay for commercial reasons, but I think that arguing this is the act of a monopolist is tenuous at best.
The biggest threat to both Sky and Virgin Media is the same as it always has been, which is “Free-to-Air” TV. In the days of old analogue TV when there was four to five channels, both Sky and Virgin had the killer combination which was Football + Movies + lots of Long Tail Channels. Virgin Media had the additional advantage of cheap telephony, recently this has disappeared but Virgin still have a slight advantage in broadband.
The proliferation of channels available on the DTT platform and the take-up has actually narrowed the gap and the only way that both Sky and Virgin Media can keep their advantage is either through exclusive content, improved quality or additional features. Last year’s record auction of the premier league rights, the recent manoeuvering to break the Sky monopoly with the Hollywood studios, the relentless promotion of High Def TV, Video on Demand and PVRs should be seen in this context.
This context also helps to explain the recent actions of the beeb:
I firmly believe the only way for the PayTV industry to counter the creeping scope of the beeb is by offering the customer a premium service which is simpler to use and contains some premium content. As convergence occurs, BT is going to be drawn more and more into the battle. A lot of the technology being proposed is going to be well beyond the average viewer. This is the beebs Achilles heel, the biggest beeb viewers are not technologically savvy, not going to be big users of the new services and be extremely upset that the beeb is spending more and more of the licence fee on these projects.
Both Sky and Virgin Media have a chance is this area with both having a vast army of customer support staff. A perfect losing strategy is drawing the customer into an argument between themselves. Also, Virgin Media have a long way to improve having historically had an extremely poor customer service record.
I don’t believe the beeb can ever be beaten in the political sphere, however the commercial sector has a chance in winning the hearts and minds of the consumers. This is why I believe the battle between Virgin Media and BSkyB makes zero sense and instead both should be positioning themselves against the publicly funded broadcasting. The beeb and channel 4 must absolutely love the current disputes because they reinforce their positions.
Virgin Media should sit down and think long and hard the real reason why BSkyB thought that value of their programming had fallen over the last few years. I would argue that is because the BBC, ITV, Channel 4 and Five have all launched lots of new channels which are relentlessly cross-promoted on their main channels and have higher viewership figures than either the Sky or Virgin Media channels. In this environment it is hardly surprising that BSkyB think the Virgin Media channels have dropped in value. The only solution to this problem is for Virgin Media to improve the appeal of their channels and gain viewers – it is a long and difficult road that Virgin Media face in the content arena competing against the Public Sector Broadcasters.
However, this doesn’t account for the fact that Sky wanted to raise the price of its channels to Virgin Media despite Virgin Media stating the Sky share of viewing had also dropped over the previous year. I can see why Virgin Media didn’t want to pay for commercial reasons, but I think that arguing this is the act of a monopolist is tenuous at best.
The biggest threat to both Sky and Virgin Media is the same as it always has been, which is “Free-to-Air” TV. In the days of old analogue TV when there was four to five channels, both Sky and Virgin had the killer combination which was Football + Movies + lots of Long Tail Channels. Virgin Media had the additional advantage of cheap telephony, recently this has disappeared but Virgin still have a slight advantage in broadband.
The proliferation of channels available on the DTT platform and the take-up has actually narrowed the gap and the only way that both Sky and Virgin Media can keep their advantage is either through exclusive content, improved quality or additional features. Last year’s record auction of the premier league rights, the recent manoeuvering to break the Sky monopoly with the Hollywood studios, the relentless promotion of High Def TV, Video on Demand and PVRs should be seen in this context.
This context also helps to explain the recent actions of the beeb:
- the intense political lobbying for more spectrum from the Digital Dividend is only the “Public Sector Broadcasting” industry staying we need more channels to negate the Sky and Virgin Media capacity advantage – although spectrum is a lot less scarce than before they want another public subsidy. This time around they are using the excuse of High Def TV for this free spectrum and public subsidy.
- the iPlayer and the various beeb experiments with broadcasting over the internet is just an attempt to reduce the Sky advantage in new technologies and getting the end-users and ISP industry to foot a big part of the bill. I’m sure the beeb will soon promote technology linking the computer hard disk content to TV viewing in order to deliver PVRs on the cheap.
- Video on Demand is currently a big theoretical advantage for Virgin Media, but I see the beeb trying to link to the BT and other IPTV platforms to reduce their advantage.
I firmly believe the only way for the PayTV industry to counter the creeping scope of the beeb is by offering the customer a premium service which is simpler to use and contains some premium content. As convergence occurs, BT is going to be drawn more and more into the battle. A lot of the technology being proposed is going to be well beyond the average viewer. This is the beebs Achilles heel, the biggest beeb viewers are not technologically savvy, not going to be big users of the new services and be extremely upset that the beeb is spending more and more of the licence fee on these projects.
Both Sky and Virgin Media have a chance is this area with both having a vast army of customer support staff. A perfect losing strategy is drawing the customer into an argument between themselves. Also, Virgin Media have a long way to improve having historically had an extremely poor customer service record.
I don’t believe the beeb can ever be beaten in the political sphere, however the commercial sector has a chance in winning the hearts and minds of the consumers. This is why I believe the battle between Virgin Media and BSkyB makes zero sense and instead both should be positioning themselves against the publicly funded broadcasting. The beeb and channel 4 must absolutely love the current disputes because they reinforce their positions.
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