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3Vision Insight - Now TV

02 Jan 2014
3Vision Insight - Now TV

​Now TV launched in the UK mid 2012 as an online video service owned and operated by Sky (the leading Pay TV operator in the UK). 3Vision looked at its key features and development over the past year

Now TV Launched initially as a movies only proposition with monthly SVOD Sports being added in March 2013 as a 24 hour pass. TV channels and on demand box sets have also just been added. In July 2013, Sky launched a Now TV branded Roku online streaming set-top-box, allowing access directly on TVs, along with other streaming services, including BBC iPlayer, Demand 5 and Spotify. This move would have been well planned, with Sky investing in Roku some time ago. The media streamer market is growing, with Amazon rumoured to launching one soon, but Sky’s move to launch a very low price streaming box adds a different perspective on the value chain to the likes of Apple TV and Google Chromecast.

Currently the Now TV offer is relatively straightforward, a non-contract version of their Premium Sports and Movies packs, with the recent addition of Sports (access to all six live Sky Sports channels costing £9.99 for 24 hour access), Movies (11 movies channels and VOD access to >1,000 movies for £8.99 a month), Television (10 pay TV channels and VOD access to TV Box Sets at an introductory price of £4.99 a month).

The movies price has been significantly reduced from £15 (with initially only the first three months at £8.99) to a flat rate of £8.99. This price-point seems amazing and unsustainable with the current product, as although it is a premium to Netflix and LOVEFiLM it is significantly cheaper than taking Sky Movies through Pay TV service operators, including Sky’s own DTH platform (and probably close to the regulated wholesale price).

Retailing at £9.99, the box is the cheapest media streamer on the market. This includes postage and the HDMI cable to connect the service to your TV (the cable often being excluded in situations like this). The box is available online and in major retail outlets in the UK, with bundles recently introduced at point of sale (Sky Sports Day Pass and box £14.99 and/or three months of Movies and a box for £24.99). The box is small, 84mm x 84mm x 24mm, and you plug the box into your TV set via the HDMI cable, connect to your wireless internet connection and then the service works.

Set-up is easy, with a basic user interface that works well. Now TV and a number of other Apps are pre-loaded, with any others available through the Roku Channel Store. Our industry contacts tell us the box cost to Sky - despite their investment in Roku - is greater than the £9.99 they retail it for. This demonstrates simply that Sky are willing to take on that cost (even with the box purchase having no pre-condition for sign-up to Now TV) to push this product.

Users have access to a number of other services, with iPlayer, Demand Five, Sky News and BBC News preloaded and navigable from the ‘Top’ screen, and others available to be added to the menu by going in to the Roku Channel Store. The Roku Channel Store provides access to up to approximately 50 additional services. With Netflix being added recently to the Virgin Media TiVo box this area will be a key point of interest. Nobody expects Sky to add Netflix at this stage, but beyond the current free-to-air catch-up services it will be interesting to see what Sky adds.

This is highlighted by the difference between Apps available on the Now TV box and the Roku LT (the box that the Now TV box is based on). Now TV has around 50 Apps compared to Roku’s 500+. Notable video Apps not available on Now TV but available on Roku LT boxes in the UK include; Netflix, Crackle, Viewster and Dailymotion. What is added next will be interesting to follow.

The market for media streamers is getting crowded. Google’s Chromecast is $35 in the US, the Roku LT is £39.99 in the UK. With Amazon set to release a new device of their own the market is only set to become even more crowded. Video Apps are key, and success is likely to depend on how consumers accept the offer and the openness of the devices. Device operators treatment of 3rd party services is likely to be critical, including authenticated TV Everywhere Apps (e.g. HBO Go), Catch-up Apps (e.g. iPlayer), TVOD (e.g. Blinkbox) and SVOD (e.g. Netflix and Hulu Plus). Box sellers have been conflicted before (running their own content services), but Now TV from Sky is part of a new breed of Pay TV operators that have to decide on the right approach to their walled garden.

Now TV has opened up some free services but remaining closed to other pay services such as Netflix. Sky faces some complex decisions around how to balance these areas and ensure they maximise the market opportunity as the competitive dynamics around them change.

For the full insight, please get in contact with us.

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