YouView - the last of Sky's problems
BSkyB is expected to come under pressure from new on-demand TV services, namely YouView, according to a new report by Evolution Securities.
A report in CityAm claims that the digital switchover will soon see Freeview and YouView in 22% of UK households, which, combined with the pressure on consumer spending, could put a serious dent in Sky's subscription numbers.
Sky, which could soon be fully-owned by Rupert Murdoch's News Corporation, currently has more than 10 million subscribers. It is the undisputed king of pay-TV in the UK, as CityAm says.
The investment bank's forecast comes a day after reports of a delayed YouView launch. Apparently, the Daily Mail has it on good authority that due to technical problems and disagreements between the partners (which include the BBC, ITV, BT and Talk Talk), the video-on-demand venture will not debut until late 2011, possibly even 2012.
If that proves to be true, YouView will be the least of Sky's troubles. By the end of this year, the current YouView proposition will have potentially missed the boat completely - it will be just one of many hybrid services on the market. And Sky will have no doubt conjured up their own new offering to lure non-Sky viewers or retain paying Sky customers by then.
For now, its new offering will come in the form of Sky Atlantic. Launching in February, Sky Atlantic HD is "no ordinary TV channel" (in Sky's own words) - it will provide an exclusive home to HBO's catalogue of hotly anticipated shows such as Boardwalk Empire and season 5 of Mad Men. And, of course, it is free when you take the 'Variety Pack' subscription, as well as to Sky Anytime and Anytime+ customers.
In the meantime, the recent Consumer Electronics Show showed that other players also mean business. Samsung, for one, has got a very impressive line of smart TV products.
And do not underestimate traditional players - YouView may have had the opportunity to bring catch-up TV to the 10 million+ Freeview audience (it has been dubbed a 'Freeview upgrade' in the past) but the Freeview+ box will not go unnoticed. For now, at least, PVRs remain one of the most cost-effective ways to manage your EPG (minus the rewind functionality offered by new connected TV services, of course). Freeview+ offers subscription-free recording devices for as little as £75. By comparison, YouView is likely to (eventually) launch with a £200 price tag.
PVRs are not likely to disappear just yet - after all, new research from In-Stat predicts that global PVR sales will hit the 50 million mark by 2014.
And even with talk of new and exciting internet-enabled television offerings for 2011, awareness of IPTV has still not reached mainstream levels, with less than half of the population understanding the latest TV proposition. According to Kantar Media's futurePROOF study, connected TV will have a big impact on digital behaviour in 2011. However, at the moment only 42% of the UK population claim to be aware of connected TV, although the research shows that there has already been a significant shift in behaviour stimulated by the availability of on-demand services on the TV set.
The study found that Virgin Media viewers, who already have access to on-demand content via their TV, are more likely to have watched catch-up services on their main TV set (63%) than online (22%). The Evolution Securities report predicts that Virgin Media will be the big winner over the next few years (its broadband is quicker and more reliable than other providers and its TV offering - with the likes of the BBC iPlayer - is one of the best on the market).
2011 has been dubbed the year of connected TV for some time, and there isn't a shortage of demand for new and improved TV offerings, though it is fairly safe to say that YouView will not be the catalyst that many predicted, certainly not this year anyway. As for Sky, it may want to keep an eye on technology companies such as Samsung, services such as Google TV and those quietly advancing traditional players such as Freeview. As always, there will not just be one winner - there will be lots of propositions (which will no doubt confuse consumers) but the ones that are carefully marketed and priced will surely succeed.