Direct-to-home (DTH) operators must continue to look away from their satellite roots as they strive for business expansion and increased revenues. With new platforms such as Internet protocol (IP) TV and on-demand mobile content emerging, the platforms offer opportunities as well as threats to traditional satellite pay-TV operators. In Europe, BSkyB remains one of the main trend setters among satellite pay-TV operators so its strategy in moving toward bundled services may become a pointer to other satellite pay- TV operators.

BSkyB recently launched a pair of services — Sky by broadband and Sky by mobile. The company’s Sky by broadband offering allows premium subscribers to receive films as well as sports clips on their computer desktops. Likewise, its mobile TV service, which was launched in conjunction with Vodafone in November, gives users the option to pay up to 10 British pounds ($17) a month for bouquets of content available on its 3G service.

These new delivery methods, in conjunction with BSkyB’s planned acquisition of broadband provider Easynet, could give the impression that BSkyB is reducing the importance its satellite business Stephen Nuttall, BSkyB director of business development told Satellite News that despite the business initiatives on other platforms, the importance of delivering services via satellite is not diminishing. "I don’t think you would say we are moving away from our satellite roots," he said. "Satellite is a very effective way of delivering video content, particularly live video content, to a large audience. There are things you can do with HD (high definition) over satellite, which you cannot currently do via IP, because of the nature of the network. Satellite remains a core part of our offering."

Paul Richards, a media analyst at Numis Securities added, "I think DTH is a very efficient means of beaming hundreds of channels to millions of homes, but the way the television world is moving, you do need more of a return path and for that return path, it is better to have the Easynet type activity. That also helps in terms of distributing content, which can then be stored on Sky+ boxes," he says. "They will increase in capacity throughout the years, compression techniques will improve, so that live broadcasts are beamed through DTH and other material will be sent down and stored locally on a Sky+ Drive which can be accessed on a [video-on-demand] basis."

Expand Brand Through New Delivery Channels

While satellite will remain a key delivery method for BSkyB, using other platforms to extend the brand will be key for the operator going forward. "Technology evolves very rapidly, moves on a pace and gives customers more of a say in how they want to access entertainment and information," Nuttall said. "They want to have choice, flexibility and convenience. We think that offering services through broadband, PC and 2G to 3G phones is a great way of extending the choice of entertainment that Sky gives as part of a subscription. So we are positioning ourselves to provide content across three platforms, and I think we will see a speedy adoption of those services on the PC and the mobile phone in addition to satellite, which continues to grow."

While movies on the PC are a bonus item to BSkyB subscribers, Nuttall said the PC service likely will continue to develop at a significant pace throughout the course of 2006, with (Pay-per-View) PPV movies on the PC a very real possibility. "I think it would be fair to say that we will be offering a wider selection of films than we currently do, and over time that might well be PPV, subject of course to the necessary agreements with our content partners," he said. "We have said we are going to be putting the Champions League on the Internet starting from next season. I think we will grow the content offering pretty rapidly. There are films coming into license every day so the range of titles expands quickly. In September next year, we will be offering 14 matches live on the Internet. It will be a pretty big expansion."

The Sky Mobile TV service, offered through the partnership with Vodafone, started as a free offering but now has customers paying up to 10 pounds ($17) a month for access. The operator offers two bouquets of content — a news and sports based option and a music and entertainment based package — to Vodafone 3G customers. Each bouquet cost 5 pounds ($8) each

Nuttall believes that based on early indicators there likely will be a strong demand for the service. "We have got some evidence already with subscriptions in the mobile market with other content that shows that a 5-pound price point is something that people do not baulk at. I think there is real value and that it is a top quality service we are offering," he said.

In terms of what BSkyB is learning of consumer behavior, Nuttall said, "We have done more than 5 million streams to date, and I believe that people are typically watching four channels when they go in and have a look at the service in any given session. There is an early adopter phenomenon around 3G now and around mobile TV. It has been incredibly popular, so 5 million streams is a big number and demonstrates a real demand for content in this way. People want to watch mobile TV, either if they are starved of access to a television set or if they need access to news and information."

Nuttall expects the pace of change to continue strong in 2006, both in terms of broadband and mobile. "There has been a huge amount of innovation in mobile and broadband generally. I don’t see any sign of that slowing down. If you asked me 12 months ago if I imagined that there would be 20 channels on mobile TV, and Sky Sports News and Sky News being live, I probably would have thought that was more than 12 months away," he said. "I think the pace of change will be equally as quick this year."

Contact, Robert Fraser, e-mail, [email protected] Paul Richards, Numis Securities, e-mail, [email protected]