Sky Deutschland has launched an online SVOD service that exemplifies how Pay TV operators can pursue an â€˜aggressiveâ€™ online strategy to take any remaining household entertainment budget that is about to be dedicated to on-demand movies, box-sets and programmes that are being made available in the later, post-Pay TV content rights window. A deep catalogue of movies and television series that you might expect to see in an aggregated OTT subscription VOD offer is now available to existing Sky Deutschland customers for just EUR 4.90 per month and to non-Sky consumers for EUR 9.90 a month. In both cases you get flexible month-to-month contracts following a free one month trial.
The new service, Snap, has 4,000 titles today and includes some notable exclusive deals with Disney and HBO. This is a completely different service to the existing Sky Go multiscreen offer from Sky Deutschland, which is classic TV Everywhere, offering a subset of the traditional Pay TV bouquet to various devices online tied to a set-top box subscription. It is designed to complement the Sky Anytime push-VOD offer for existing customers because Snap provides a much deeper catalogue. Whereas Sky Anytime offers recent releases, Snap offers the movies that have been through the Pay TV window.
This is not a service like the NOW TV standalone Internet offer from BSkyB in the UK. It differs in several ways. NOW TV provides the latest release movies, as seen in the traditional Pay TV bouquet of subscription movie channels. It also includes the option for live sports, whereas Snap is purely on-demand and the linear sports channels are reserved for the traditional Pay TV offer from Sky Deutschland, including Sky Go. So NOW TV represents â€˜Pay TV Liteâ€™, a cut-down version of a traditional Pay TV bouquet made available online to anyone on short-term contracts, whereas Snap is a Pay TV answer to OTT services like Netflix.
This difference determines the positioning and marketing of the two services. Snap is aimed directly at existing Sky Deutschland customers as well as non-Sky Deutschland homes, whereas NOW TV is designed only for non-BSkyB homes. The UK Pay TV operator is adamant that there is nothing about the NOW TV service that an existing STB subscriber (who also gets the UK version of Sky Go, the TV Everywhere bundle) should need.
[Since December, BSkyB has also made its Sky Store movie rental service (transactional VOD) available to non-Sky subscribers in the UK and Ireland via Roku streamer devices, the NOW TV (streamer) box made available from BSkyB and YouView (hybrid DTT/broadband) set-top boxes. This service offers titles that have just become available on DVD and boasts a catalogue of over 1,200 titles, but obviously differs from Snap because it is transactional rather than subscription. It is another example of the UK Pay TV operator chasing the on-demand movies market that lies beyond its traditional customer base, however.]
Sky Deutschlandâ€™s Snap service launched in December and covers Germany and Austria. Two obvious rivals are therefore Maxdome and Amazonâ€™s LOVEFiLM. There are reports that Netflix has been lining up Germany as one of its next markets.
Sky Deutschland says it will differentiate on the basis of the overall quality of the service, the programming quality, value-for-money and editorial experience. EUR 4.90 for a service of this kind certainly looks a bargain for existing Sky customers. According to Alice Mascia, Vice President Strategy at Sky Deutschland, consumer research showed that EUR 10 is an important psychological barrier for customers in Germany and Austria but they indicated that they are willing to spend EUR 9.90 a month on a video subscription service.
In terms of the content, there are exclusive highlights from Disney and HBO, including the arrival of HBOâ€™s Game of Thrones in the next few months. Sky Deutschland says that from day one Snap will have the most extensive HBO catalogue available anywhere, including shows like Boardwalk Empire, True Blood and all the seasons of series like The Sopranos and Sex and the City. Thanks to extensive deals with Hollywood and independents, the service includes top movies from the last few decades, top quality childrenâ€™s programmes and complete season box-sets.
The content portfolio will be extended daily, including the addition of at least one new movie each day, the company adds. Sky has been expanding on content owner relationships it has already built through the existing Pay TV service.
Snap is currently available on computers and Apple iPads, with the iPhone due to be added soon and Samsung Galaxy products next in the queue for apps. If you want to watch Snap content on the television screen one of the options is to use a Samsung Smart TV. There is an exclusive Snap/Samsung deal for Smart TV until the end of 2014. Another is to stream the content from an iPad across the home network to a television connected to an Apple TV box using AirPlay. The third option today is to plug one of the Snap compatible devices into the TV using an HDMI, most obviously a computer.
Sky Deutschland has seen an opportunity to play in the SVOD market itself, recognizing the growing demand for on-demand viewing and the slow decline of DVD rentals. Asked where German and Austrian consumers will find the extra money for a service like this, Alice Mascia comments: â€œDigital transformation is an important driver: Snap is a strong alternative to DVD rentals. Continual rapid growth of our Video on Demand service, Sky Go and Sky Anytime, are proof of the growing success of these services in general.
â€œThe need for TV on demand is arising and a new target group is emerging. With Snap, we are trying to reach these consumers directly via the Internet,â€ she adds.
In its press statement, Sky Deutschland emphasized that this service is the perfect complement to Sky Anytime and Sky Go. â€œFor Sky customers, Snap provides a much deeper catalogue, with a chance to watch great series from the very beginning, and an even wider collection of great movies,â€ the company says.
Mascia reiterates that for existing customers, Snap is an extension of the Pay TV offering, which is why it is not being offered free to customers. â€œThe vast majority of the titles are in a later [rights] window than the programmes our customers enjoy on their regular subscription and on Sky Go.â€
On the set-top box and Sky Go there are hundreds of new blockbusters from the Sky Cinema channels, which are available up to 12 months before their free-TV premiere. There are also U.S. series that are available just a few hours after they air stateside. Sky Go also includes all the live Sky Sport content including Bundesliga football.
Brian Sullivan, CEO at Sky Deutschland, points out that Sky has pioneered Pay TV multiscreen in Germany and he claims that the success of Sky Go makes the company the largest OTT Pay TV service in Germany and Austria. Indeed, his company won one of the two prizes available for â€˜Best Use of OTT by a Pay TV Operatorâ€™ in the 2013 Connected TV Awards and also received the â€˜Outstanding Achievement in Connected TV Award 2013 for Sky Go.
According to Sullivan, â€˜With Snap we are taking the next step, giving Sky customers and all entertainment fans the chance to enjoy a new selection of top quality content from the Sky Collection. Snap will bring our extensive editorial experience, outstanding programming quality and comprehensive partnerships with the worldâ€™s leading providers, like HBO, Warner, Fox, Paramount and Disney, to a whole new audience.â€
Alice Mascia adds that for non-Sky customers it is an easy way to access a part of the Sky world. â€œIt is a chance to get a taste of our unique programming quality.â€ The Pay TV operator is using a new consumer brand but making the most of its existing brand equity, using the strapline: â€˜Snap by Skyâ€™.
This new service is further evidence of how, having largely seen off the threat of cord cutting with defensive Internet strategies in the form of TV Everywhere, Pay TV operators are now looking to exploit OTT to expand their market opportunities. Snap is about finding new customers who were not previously Sky Deutschland subscribers and taking more revenue from existing customers. Sky Deutschland recognizes that there is money on the table in its own homes, in non-Pay TV homes and in the homes of its rival operators that will be spent on a service of this kind, offered by somebody.
There is growing evidence that online SVOD and Pay TV are complementary. In its Connected Consumer Survey conducted in October 2012, covering 6,500 respondents across France, Germany, Spain, UK, Poland and the U.S., the research firm Analysys Mason found that Pay TV subscribers are more than twice as likely as non-subscribers to use paid-for online video services such as Netflix and LOVEFiLM (19% of Pay TV subs used such services, compared to 9% of non-subscribers).
And the UK consulting firm Decipher, which runs the Mediabug consumer tracking service, declared in October 2013 that only 5% of homes cancelled or reduced a Pay TV subscription in the UK because they had taken an SVOD subscription, noting that this figure is well below the average churn rate. It concluded that for UK audiences at least, it is not necessarily a case of â€˜either/orâ€™ when considering Pay TV and SVOD services.
It seems that the new market being created for online on-demand does not need to steal customers from Pay TV in order to grow. And part of the reason for this must be the transition from DVD rental to VOD, as Alice Mascia acknowledges above. Taking the UK as an example, the expected loss of Blockbuster, which is now in administration, will leave quite a lot of rental refugees looking for a new home. If they were not already intrigued by the growing number of low-cost connected TV devices in the market and the glossy VOD stores you can find on them, then this will give them the nudge they need to check them out.
For some time, online SVOD services from the likes of Amazon LOVEFiLM and Netflix were viewed as threats to Pay TV. They were the poachers and Pay TV operators were the gamekeepers, trying to protect their existing stock of customers. Snap is a lovely example of how the gamekeeper has turned poacher.