In just seven years, subscription streaming services, led by Netflix and Amazon Prime, have signed up nearly 50% of all UK households. Indeed, because many homes subscribe to more than one service, the total number of such subscriptions is over 19 million. The US cable giant Comcast last year paid a fancy price to buy Sky, even though that company’s core UK business (pay-TV channels, owned or packaged by it) has been declining in recent years in terms of subscribers, and possibly in terms of revenue. But – as so often when faced with competition – Sky has fought back, more than making up the lost customers by launching its own streaming service, NOW TV, which offers segments of its main service for a monthly fee. Perhaps the Comcast gamble will pay off, especially in the Sky territories outside the UK.
The challenge of on-demand
After all, for both Sky and Virgin Media (the UK’s cable TV provider), which package up telephony, broadband and large bundles of channels topped up with an array of “box-set” offers, there is another defence against the “streamers”: co-option. They can accommodate the insurgent SVOD (subscription video on demand) services, soon to be joined by Apple TV, a Disney proposition, a Warner service and probably one from NBC, within their own delivery systems, providing one-click access to Netflix and Amazon Prime (and no doubt the others in due course).
For the UK’s traditional broadcasters, SVOD is not a direct challenge. It does not compete for revenue with ITV, Channel 4 or Five – indeed, they can earn useful extra cash from their own modest video-on-demand offerings and from advertisements on their on-demand and catch-up free-to-air services, piggybacking the on-demand consumer mentality Netflix and Amazon Prime generate. As for the BBC, it has exclusive access to the licence fee till at least 2027 to cushion it against external financial pressures.
