Sky bids to future-proof itself with Irish launch of Now TV

Younger people, sports fans and pay-TV refuseniks the key targets for streaming service

 

Five years after it first introduced the product in the UK, Sky has launched Now TV in the Irish market. The concept is a simple one: Now TV is a streaming service that offers temporary “passes” to people who can’t or don’t want to commit to a Sky subscription, but might like to make an occasional splurge on content.

Want to settle down for a day of sporting action that is – perhaps annoyingly – only showing on Sky? That will be €10, thanks. For a week, the price is €15 and for the month €50. How about an Entertainment Month Pass, which includes access to more than 250 box sets and 10 premium channels? Or a month of movies on Sky Cinema? Both are priced at €15.

Sky says the most advanced user interface for the service is on the Now TV box, which is manufactured by Roku and costs €40 (with an entertainment or cinema pass included for two months). But the box, which will be sold in “selected retail partners”, is not compulsory: Now TV is also accessible through multiple other devices.

So why make this available in Ireland now? “We wanted to make sure to launch the right product,” says Ann-Marie MacKay, director of products and marketing for Sky and Now TV in Ireland.

Evolving

“The product was still evolving over time in the UK. It’s the best it’s ever been. We also know that the segment that we’re after, the younger, streaming segment, is bigger than it has ever been.”

The €15 entertainment pass is priced some way higher than the £6.99 it costs in the UK. Indeed, based on current exchange rates, even the €10 it costs for a day pass to Sky Sports comes in above the £6.99 (€8.25) equivalent price tag in the UK.

There’s a bit of a jump here, is there not?

“We would always say this – we can’t necessarily translate the prices of stuff in the UK over to euro. All our prices are different,” says MacKay. “What we do is we look at the market and decide on the pricing based on what would make sense here, and €15 is absolutely good value, if you consider that the general entry point for traditional pay-TV is €31 or €32.”

Although the services are not directly comparable, Now TV is a closer competitor than “full fat” Sky to Netflix, another “cancel at any time” proposition. However, Netflix notably has a lower price point of €9.99 for a standard subscription.

Why did Sky opt for €15 for its entertainment pass when Netflix is €9.99? MacKay cites “the value that we believe is in the content”.

So what is on offer? Although Sky is now commissioning or co-commissioning more of its own dramas (including compelling serial Guerrilla and the forthcoming Benedict Cumberbatch mini-series Melrose), the main attraction on the entertainment pass for many will be access to the current and back catalogue of dramas and comedies to which Sky has rights courtesy of deals with US networks HBO and Showtime.

The shows covered by the deals include Billions, Big Little Lies, Veep, The Affair and the just-finished Girls, although nothing compares in either rating figures or volume of hype to Game of Thrones, which has just two shorter-than-usual seasons left to run. The first of these happily debuts in July, a month after Sky Ireland embarks on a big advertising campaign for Now TV. “We know it does really well for Now TV,” says MacKay of the HBO show.

Streaming

Because Sky does not offer the Sky Atlantic channel to pay-TV rivals such as Virgin Media and Eir, the audience for Game of Thrones in Ireland breaks down into two categories: Sky households and people who stream or illegally download it from well, unofficial sources. Recent moves by broadband companies to crack down on piracy, however, may support the growth of over-the-top (OTT) services like Now TV, as well as Netflix and relative newbie Amazon Prime Video.

For a loyal cohort of viewers, certain “golden age” television shows are an addictive, must-see pleasure. But the real business is likely to lie in sport. This is where Sky has exclusive rights to action that – unless you’re channelling the spirit of The Likely Lads (a telly reference hot from 1973 there) – must be consumed live.

Revenue from Now TV sports passes reached “record levels” in the second half of 2016, Sky recently told investors, while in the financial year to the end of June 2016, it sold more than 2 million sports passes. It still seems to rake in more cash, however, from pay-per-view events that are not automatically available to subscribers, but sold for an additional charge through Sky Sports Box Office.

Sky’s total “transactional” revenue (£107 million – €126m – for July-December 2016) is small compared to its subscription business (almost £5.4 billion in that same half-year period). But it is faster growing, rising 11 per cent compared to 4 per cent growth in the churn-hit subscriber market.

Sky has 664,000 subscribers in the Irish market, according to figures from television research firm Nielsen. This makes it comfortably the biggest pay-TV company here. Isn’t it worried that some of them will cancel their higher-priced contracts for the “pay-lite” one and that Now TV will end up cannibalising its existing business?

“It’s a really interesting question and something we would have discussed a lot when we were developing the product,” says MacKay.

“We haven’t seen a lot of cannibalisation, if any, in the UK, and here in Ireland, again the Now TV brand is so different. It’s streaming, you can’t record, you can’t do a lot of the stuff that traditional pay-TV and technology will allow you to do. It’s quite a different audience that we’re after,” she says.

“They tend to be younger, into content, event-driven, but not necessarily into the same thing. They are people who chop and change quite a lot.”

Sky is confident this means there is room in the market for them alongside streaming service leader Netflix, and that its target demographic won’t be already maxed out on subscriptions.

Customers

“The beauty of this type of product, and the likes of Netflix, is that it’s not contractual. You can dip in and out. It’s really down to you. There’s no reason why they can’t live along side each other,” says MacKay.

Critically, the “no-strings” aspect will appeal to people who can’t install a satellite dish even if they wanted to – perhaps because they are renters, or because they live in an apartment block that bans dishes.

“We hear that all the time: ‘If I could I would but I just can’t’,” she says. She mentions recent CSO figures showing home ownership has declined to its lowest rate since 1971.

Another target market is the cohort of 191,000 Irish households that Nielsen says only receive the Irish digital terrestrial television service Saorview. “Now TV opens up to us a whole new avenue of free-to-air customers who would just never consider pay-TV,” MacKay says.

In the US, the phenomenon of cable customers dropping their subscriptions for cheaper OTT streaming options is known as “cord-cutting”. Here, the evidence points more in the direction of a newer generation of households not signing up to pay-TV in the first place. They have no cord to cut.

Sky, a satellite TV company that now describes itself as “agnostic” on how television is delivered, has to future-proof itself.

“I have a 22-year-old brother and he couldn’t even consider having something in his house that he had to pay money for every single month for 12 months,” says MacKay. “When I talked to him about this, he said, well that’s what normal people do. It’s just the way they consume content.”

Decision drivers: The “event” TV that might prompt people to pay up for Now TV

Game of Thrones

A seven-episode season of George RR Martin’s fantasy epic begins on July 16th. Game of Thrones belongs to a select group of “event” TV dramas that viewers must watch close to their US transmission times in order to prevent spoilers - despite commonplace piracy, the last 10-episode season brought more than 6 million viewers per episode to Sky.

British and Irish Lions Tour

Sky Sports has exclusive TV rights to the 10 rugby matches in the British and Irish Lions tour of New Zealand, which begins on June 3rd when the Lions take on the New Zealand Barbarians in Whangarei. In a summer otherwise light on major sports tournaments, fans with no Sky Sports access might be tempted by a Now TV pass.

GAA rights

Sky’s venture into GAA territory in recent years is a point of contention for some followers, but it renewed its deal in December and has the rights to 20 All-Ireland matches both this summer and for each of the next five seasons until 2021. Non-Sky subscribers now have the option of paying for day, week or month passes.

English Premier League

Sky has the rights to 159 Premier League matches per season in the Irish market – more than the 126 matches it has in the UK. The difference is made up of 33 Saturday 3pm kick-offs that can’t be shown in the UK because of a “blackout” designed to prevent attendance fall-offs. The next season begins on August 12th, but there’s still a good chance of last-day drama this season.