Charles Arthur 

BSkyB’s internet TV plan is brilliant, a rare example of perfect timing

Charles Arthur: In essence, Sky is doing with its television output what Amazon does with the Kindle
  
  

Braveheart
Wisely, BSkyB is not rushing Braveheart-style into battle to try to slay the internet (it didn't end well for Braveheart, either). Photograph: Cine Text/Allstar/Sportsphoto Photograph: Cine Text / Allstar/Sportsphoto Ltd. / Allstar

On the internet, it's always better to jump before you're pushed. That's the clear lesson from John Naughton's new book, From Gutenberg to Zuckerberg, which points out – among other things – that "on the internet, disruption is a feature, not a bug". In other words: change just keeps on coming; and if you wait to be pushed rather than leaping into the flood of change, you'll generally find yourself face down in the mud with people running over your back.

Equally, though, timing matters. Ten years ago I recall mobile phone companies that had just spend billions on 3G bids demonstrating to journalists how the latest handsets could stream TV direct to their mobiles. It was great, if you wanted to watch something that looked like the first moon landing viewed on a TV across a road. TV on mobiles didn't take off; music did.

But now we have the bandwidth and processing power to give us video capability all over the place. And what I think is the most impressive case of jumping before being pushed in the media ecosystem recently: BSkyB's announcement that it's going to launch an internet TV service that will let you get content from it on an ad hoc basis, no matter whether you use Sky's broadband or pay for Sky in your home.

In essence, Sky is doing with its TV output what Amazon does with the Kindle: saying "we don't mind how you view our content. We just want to be the conduit so we benefit from your attention." Video-on-demand (VoD) for anyone prepared to pay, not just existing users of its pay TV service.

Brilliant. Rather than strapping unsold satellite dishes to its arms and rushing Braveheart-style into battle to try to slay the internet (it didn't end well for Braveheart, and never ends well for companies that try it), BSkyB is using its heft and content breadth to head off defections to would-be rival services – Netflix, YouView (the catchup service for terrestrial channels), LoveFilm. Plus the more worrying one on the horizon – Google TV and the other implementations of internet-connected "smart TV" (watch out for warring incompatible versions from Samsung, Sharp and Sony). And that's before Apple springs whatever it's planning in this space.

You won't need a contract, you won't need a satellite dish, you won't need to be on Sky Broadband. It's not often that one sees a large media company doing the smart thing (swapping non-internet pounds for internet pennies, in the expectation that the internet scale will win out), but this strikes me as perfectly timed. Plus BSkyB's huge marketing budget should mean that lots of people are going to know about it.

You could argue that BSkyB didn't have that many options. New signups are slowing – only 40,000 in the fourth quarter, compared with 140,000 a year earlier. It's in around 10m households, but that's only 36% of the potential UK and Irish figure. Meanwhile, 13m UK households remain stubbornly unsigned to a pay TV service of any sort – and look unlikely ever to sign. But with internet penetration at around 90%, the chance to sell content to those 13m is clear enough.

It's all part of a very neat plan on BSkyB's part, where it's also aiming to hold its existing customers close via its (heavily advertised) SkyGo service, which streams content to iPads, iPhones, laptops and (promised this month) on Android smartphones too.

This isn't going to be easy, of course; on the internet, nothing is. But as an example of embracing the further commercial possibilities of the net, while holding on to an existing (very profitable) business model, it's pretty hard to beat.

The most fascinating part will be watching how this plays out against the efforts of Google, which simply wants people to use the internet so it can show them adverts. BSkyB is looking to head that off and show the adverts it chooses. I wouldn't wager against it succeeding significantly.

 

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