Sky Readies UHD, Mobile, and Streaming Services

Streaming Media Europe

Sky puts mobile and streaming at heart of its strategy to combat Netflix and local payTV rivals BT and Virgin.

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British-based European satellite broadcaster Sky has unveiled an arsenal of new technologies and services intended to fight off competition from rivals BT and Virgin Media and, more pertinently, from online video streamers Netflix and Amazon Prime.

Sky's announcements were timed to coincide with positive half-year financial figures but coincided with a regulatory greenlight for BT Group to acquire mobile provider EE.

Not only must Sky confront a telco which has stolen its thunder on offering UHD TV, scooped a major portfolio of live sports, and suddenly amassed a 31.3 million mobile subscribers, it must face down the threat from Netflix which has rapidly amassed 4.5 million UK subs.

So the product revamp, reportedly representing £250 million of research and development and Sky's first significant refresh in a decade, has to work.

Broadly, Sky has set out to make its service more mobile and more reliant on streaming. The flagship is Sky Q, a replacement for Sky+ HD, available as a standard package costing £42 per month, with the more comprehensive Sky Q Silver priced £54.

There was speculation that Sky would move services, such as storing recordings, wholesale to the cloud, but the hard drive remains central to the offer.

“One thing that is very important for us is making sure all customers get the same experience,” Mai Fyfield, Sky's Chief Strategy Officer, told The Telegraph. “So designing something in a way where only a small fraction of our customers would be able to benefit from it because you have to have an amazing broadband connection doesn’t make sense.”

Sky Q Silver has 2TB of memory versus 1TB in the basis Sky Q (though only 1.7TB and 700GB respectively are available to customers because Sky has built in capacity for future enhancements). For wireless capability, both boxes are dual band on 2.4GHz and 5GHz and boast Bluetooth 4.0. Both boxes can show web content in sidebar apps on screen while the TV plays. On launch these include Sky News, Sky Sports News HQ, and Sky Weather.

Sky Q Silver has 12 tuners ,allowing users to record four channels while watching a fifth live channel. Sky Q has 8 tuners for recording 3 simultaneous channels. The main difference between the two boxes is that additional tuners in Silver permit what Sky calls Fluid Viewing, enabling users to watch TV on multiple screens around the home and on two tablets at the same time.

AirTies Mesh software enables this functionality. As mobile devices move throughout a Sky home, the software monitors the shifting demands for broadband and TV streams and decides in near real-time which path to send data packets through to optimise performance. AirTies says its technology addresses the problem of the slowest performing device degrading overall performance for all other devices in the home. It uses power-line to augment links between the smart devices.

“This major new step in Sky’s strategy validates our long-held view that having multiple access points smartly linked together is the way forward for optimum home network performance,” said Philippe Alcaras, CEO of AirTies Wireless Networks, in a statement. “A flawless home network is becoming the real must-have for premium content providers.”

Coming later this year is a Sky Q app for watching recorded or live shows synced to a mobile device. Fyfield claims that the ability to "sideload" recordings from the STB to a mobile device is a world first. She told The Telegraph that this required renegotiating contracts with rights holders, a feat only possible because of Sky’s scale and continuing growth. However, agreement has not been reached with Sky's main content partner, the BBC.

YouTube is now available on Sky's boxes for the first time, although not Netflix because Sky wants to retain viewers of all programming on its service within its own interface. In this it departs from BT and Virgin Media, which offer Netflix on their set-top boxes via a Netflix GUI that the OTT provider controls.

“Customers want the same experience,” said Fyfield. “That is the way we have dealt with the BBC, ITV and Channel 4 and we know that is why people prefer our on-demand service to what you might see on YouView [BT] or Virgin Media.”

Also coming this year, and likely just ahead of the 2016-17 soccer season at the end of July, is a 4K UHD TV service for which Sky Q is ready.

Now TV 2

While Sky Q is more aimed at keeping and upgrading existing Sky pay-TV customers, it is also keen to continue to attract pay TV refusniks with a new version of its Now TV catch-up service with a packaged cost from £6.99 a month. Like the current version, the new box will be made by Roku and launched later this year.

Fyfield observed that Sky's shrewd packaging of its service at different price levels had enabled it to continue to grow while payTV players in the U.S. have suffered. Its proactive launch of Now TV in 2012 is credited with shoring up business from customers who might otherwise have drifted to Netflix.

Sky Financials

Sky's performance in the second half of last year was better than expected with revenues between July to December rising 5% to £5.72 billion ($8.2 billion) up from £5.44 million year-on-year, while operating profit rose by 12% to £747 million.

It added 337,000 new customers during the period across its divisions in UK and Ireland, Germany, and Italy including 120,000 in Germany and Austria, 12,000 in Italy and 205,000 in the UK and Ireland—its highest rise there for 10 years.

Sky Prepares Mobile Launch

The £12.5 billion newly ratified deal between BT and EE (a joint venture between Deutsche Telekom and France's Orange), will have huge ramifications for the media industry in the UK. BT will have the power to take on existing mobile, broadband, and TV providers including TalkTalk, Sky, and Virgin Media.

For example, BT could use content from BT Sports, which has live TV rights to Champions League and some Premier League soccer games, to boost average mobile revenue.

While the move reduces the number of mobile players in the UK to five, a takeover by CK Hutchison's Three of Telefonica's O2 UK could see the market cut further.

The £10.25 billion ($14.9 billion) bid is opposed by British watchdog Ofcom, which argues four rival mobile operators are required to protect consumers. It is urging European authorities to block it.

While the pieces are up in the air, Sky has spied a potentially advantageous position. It has backed the merger believing that a union will only be waved through if infrastructure assets - such as spectrum - are sold off. Sky could bid for that capacity as it readies the launch of its own brand mobile service carried over the O2 UK network, this summer.