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The Case study: NOW TV – BSkyB’s OTT video strategy

  • May 2014
  • 21 pages
  • Analysys Mason
Report ID: 2132956


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BSkyB, a leading pay-TV operator in the UK, capitalised on its extensive portfolio of content to launch its NOW TV service in July 2012. This case study focuses on how the service is helping BSkyB to increase its presence in the over-the-top (OTT) video market.

Executive summary

-Leading UK pay-TV operator BSkyB capitalised on its extensive portfolio of exclusive and premium content to launch NOW TV, its own over-the-top (OTT) video service, in July 2012 . This was in response to slow growth in its traditional base of high-end pay-TV subscribers, which is in sharp contrast with the rapid growth in the low-end video segment during the past 2 years or so.
-BSkyB has carefully built up its NOW TV proposition, gradually adding content in order to position it as a modular ‘pay-TV light’ add-on for free-to-air (FTA) TV viewers. BSkyB carefully designed its tariffs to attract them, while minimising the risk of cannibalising its core business. The biggest challenge for pay-TV operators is to make sure that this risk is well calculated.
-BSkyB started cautiously, assessing the market for its OTT video service and the potential impact on its core satellite pay-TV business, but has since taken various measures to drive the take-up of the service, notably by launching a low-cost media streaming device in July 2013, and substantially reducing the pricing of its NOW TV Movies proposition.
-We expect that NOW TV’s content will represent a genuine low-cost alternative to traditional pay TV, catering primarily for the so-called ‘cord-never’ generation who would not consider a standard pay-TV subscription. This distinguishes it from many other OTT video services, such as Netflix, which primarily feature long-tail catalogue content that most pay-TV operators do not offer to their subscribers, making them a complement, rather than a genuine alternative to traditional pay-TV services among cost-conscious and commitment-shy consumers.
-We believe that the key opportunities for NOW TV are as follows:
-Bundling the NOW TV Box and content with BSkyB’s fixed broadband services: BSkyB has already started to do this, creating a low-cost alternative to its standard triple-play services, while differentiating its broadband offering.
-Making BSkyB content available abroad: Subject to having the appropriate content rights, BSkyB could use the Internet to deliver its content to British expatriates and English speakers on an international basis.
-The service could be used as a blueprint for BSkyB’s ‘sister’ companies in Germany and Italy: BSkyB typically shares examples of ‘best practice’ with its sister companies within 21st Century Fox. Sky Italia launched its Sky Online service in March 2014, and can benefit from the lessons learned through NOW TV.

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