Nov 13th 2018

Sky marries Netflix; is this a turning point for the future of TV?

Bride and groom on steps

NAB, IBC and MIPCOM may be over for another year, however there’s still a lot going on in the TV and over-the-top (OTT) space. At Babel, we see industry trends unfold first hand, working with a number of video, content delivery and adtech companies innovating in this space.

One major theme we’ve seen beginning to emerge during 2018 is consolidation and collaboration. This came to a head earlier this month, with Sky and streaming giant Netflix officially joining forces to launch an integrated on-demand TV service. First announced back in September, the partnership will allow Sky Q users to access content on Netflix through their TV set-top box and as part of their subscription, without having to open a separate app.

The future of TV

As the threat of subscription video on demand (SVOD) services continues to loom over pay TV’s head, the question on many people’s lips will undoubtedly be whether we will see more partnerships like this? Will other traditional broadcasters follow suit and move towards this model? And how will this shape the future of TV?

First though, what does the wedding of Sky Q with Netflix look like from the viewer’s perspective? Recommendations for both Sky’s content and Netflix’s films and series will be available directly through the Sky Q interface. Netflix content will also be included within Sky’s search functionality, meaning that the likes of Stranger Things and Orange Is the New Black will sit alongside Fortitude and Game of Thrones. Sky Q subscribers will need to pay an extra £10 to see Netflix on their Sky Q homepage and those already subscribed to Netflix will be able to integrate their account for free.

Collaboration in the broadcast industry

The shared content approach isn’t exactly new to Sky. Last year, the broadcaster agreed a channel sharing deal with BT. The addition of Netflix places the service alongside Spotify and YouTube, which are already part of the Sky family. Sky isn’t the first broadcaster to make this move either. Back in 2013, Virgin Media integrated Netflix to its pay-TV service and, according to the broadcaster, is now its fourth most popular channel. Virgin strengthened its alliances with Netflix earlier this year by introducing integrated billing, offering the same convenience for the viewer as Sky with its approach.

Earlier this year, a report by media regulator Ofcom found that the number of subscribers to online streaming services had overtaken those signed up to pay-TV providers like Virgin Media, Sky and BT for the first time. The total number of subscribers to services like Netflix and Amazon hit 15.4 million, compared to pay TV’s 15.1 million. With this in mind, Sky’s recent move is a clever one, as it looks to retain subscribers, and particularly those younger viewers who are increasingly shying away from traditional TV.

A challenger to Netflix?

Some may criticise Sky for striking a deal with the ‘killer of TV’, especially as ITV’s Chief Exec Carolyn McCall last month warned that now is the last chance for UK broadcasters to build a British challenger to Netflix. However, as the broadcaster strives to remain relevant, no one can blame it for adopting a model that is not only familiar but appealing to young people.

Sky’s move is a clear indication that traditional TV is changing. Both it and Virgin Media opted in the face of competition to jump into bed with the enemy, and in time we may see others follow suit, bringing significant disruption to broadcasters’ business models.

If you’re looking to broadcast your message in an increasingly crowded VOD industry, get in touch – we’d love to hear from you.