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A New Level to Pay TV Netflix Integration January 2019 Sky Ultimate on Demand Introduction

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Sky Ultimate On Demand A new level to Pay TV Netflix Integration January 2019 Sky Ultimate On Demand Introduction In November 2018 Sky joined the long list of Pay TV operators that offer Netflix to their subscribers. With Movistar also launching at the end of 2018 in Spain, and OSN (Middle East) set for launching in 2019 we may have reached a tipping point with operators approach to Netflix. Operators who have been strong in building their own channels and services are now willing to fully embrace the importance of Netflix to their customers, and the belief that they are not competing for subscribers outweighs any issues over their competition for content and customer revenue. “We want Sky Q to be the number one destination for TV fans. Partnering with Netflix means we will have all the best TV in one great value pack, making it even easier for you to watch all of your favourite shows.” Stephen van Rooyen Chief Executive, Sky UK & Ireland Insight - Sky Ultimate On Demand January 2019 2 Sky Ultimate On Demand Netflix and Pay TV Operators Netflix’s first Pay TV integrations were in 2013 with TiVo boxes offered by Virgin Media (UK) and Com Hem (Sweden). Virgin were the first to add Netflix to their set-top-box in November 2013, and more have followed as Netflix’s market position has grown and operators realised they can work together. Operators have been adding Netflix to their own services to varying degrees, with variations to the user experience, billing, UHD availability and the pricing proposition. Sky’s bundled offer is a significant development. Selected Pay TV Netflix Launches 2013/2014 2015 2016 2017 2018 Coming in 2019 Denotes UHD capable Insight - Sky Ultimate On Demand January 2019 3 Sky Ultimate On Demand Basic Proposition With a basic Sky Q subscription you can now add Netflix through Ultimate On Demand (UK) or Entertainment Plus (Ger). You get a discount on the combined price of Sky and Netflix that equates to approximately 20% of the Netflix price. Current Netflix subscribers can take Ultimate on Demand from Sky and link their Netflix account and keep their profiles. Current Netflix subscribers can also ignore the Sky offer and still access the service through the Sky Q box. In the UK if you want Netflix UHD you need to pay the higher tier cost to Netflix and take multiscreen from Sky. Customers could be signing up to 18 (UK) or 24 (Ger) month contracts depending on the current status with Sky. Insight - Sky Ultimate On Demand January 2019 4 Sky Ultimate On Demand UK Proposition Old New Entertainment TV Pack & Box Sets Entertainment TV Pack & Ultimate On Demand Sky Box Sets £5.00 Sky Box Sets £5.00 Netflix (Standard) £7.99 Netflix (Standard) £7.99 Unbundled Cost £12.99 Ultimate bundle £10.00 Saving £2.99 (23%) Sky Q Entertainment costs £22 p/m (18 month min. contract), and now subscribers can add Netflix. Sky offer Sky Box Sets for £5 p/m, and although this pack is available Sky are now only marketing Ultimate on Demand, a combination of Sky Box Sets and Netflix’s standard subscription for £10, a £2.99 saving. Viewers wanting to access Netflix at UHD can subscribe to Netflix’s Premium plan (an additional £2), but also need 'Sky Q Experience’, Sky’s new name for multiscreen which costs £12 p/m. UHD content is arguably still in limited supply for operators, and Netflix will offer a useful source of UHD content for operators as they drive home the benefits of UHD boxes in customer acquisition and upsell. Insight - Sky Ultimate On Demand January 2019 5 Sky Ultimate On Demand Germany Proposition The Sky Entertainment pack in Germany costs €24.99 and now subscribers can add Netflix by upgrading to the Entertainment Plus pack for €32.99, a €2.99 saving. The Entertainment Plus pack has a 24 month commitment, and UHD can be accessed simply by upgrading the Netflix subscription plan for an extra €3. Sky Germany Entertainment Pack €24.99 Netflix (Standard stand-alone pricing) €10.99 Combined (Entertainment Plus Pack) €32.99 Saving €2.99 Insight - Sky Ultimate On Demand January 2019 6 Sky Ultimate On Demand Changing Approach to the Pay TV Walled Garden The UK, Germany and Italy all present very different marketplaces for Pay TV, but gradually Sky is opening up their platform to more Apps and services through the Sky Q set-top-box, now including subscription services. Since the launch of Sky Q in 2016 they have launched a relative small number of Apps, including most recently Spotify, Netflix, ARD and ZDF Media Libraries - with key UK broadcaster services not coming via Apps. Insight - Sky Ultimate On Demand January 2019 7 Sky Ultimate On Demand Now TV and Sky Ticket The agreement with Netflix also extends to Sky’s contract free streaming services. In the UK and Ireland, Sky are launching Netflix as a standalone app on Now TV’s streaming devices. Sky have said that Sky Ticket in Germany and Austria, and Now TV in Italy, will launch Netflix on their devices. Insight - Sky Ultimate On Demand January 2019 8 Sky Ultimate On Demand User Experience Although Sky are surfacing Netflix Home throughout the Sky Q interface, we will have Netflix titles are surfaced in Top Picks on the Sky Q Home to wait to see the full extent of this. Users can continue watching unfinished titles You can access the Netflix app by scrolling down to Apps The level of promotion of Netflix will depend on Sky’s approach and policy and the On Demand capabilities of the technology. Top Picks, Netflix Originals, Recently Added will all surface Netflix titles There are some early signs of deep Individual Genre sections also feature Netflix titles integration (e.g. specifying which Netflix profile might want to continue watching a Apps show) but we also notice an absence of Users can simply go to the Netflix app to find content Netflix content promotion in general areas. The app is available from the Sky Q Home Sky have been growing the usage of data to Users have to scroll down to the App Menu first promote content in 2018, with statements that they will increase this in 2019, so how will Search Use Sky’s Search function to search titles by text they treat Netflix, and how they may work You cannot search Sky and Netflix content at the same time together will be one to follow. No voice search active for Netflix currently Insight - Sky Ultimate On Demand January 2019 9 Wrap Up Sky’s launch of Netflix is significant given their dominant content position in the UK market and that although others have offered generous promotions, Sky are ‘hard bundling’ with their own Box Sets. Although the approach varies in Germany and the UK based on service variations, Sky is effectively discounting Netflix £2.99/€2.99. With this they are driving upgrades of Sky Q and multiscreen, and tying users in with a more complete service on longer contracts. Sky are rapidly changing their usage of data driven recommendations to their services and as this changes it will be interesting to see how Netflix content will be surfaced. There are some early signs of the service being well integrated, but there are also some features you might expect to have missing, such as the ability to search across all content at the same time irrespective of it being a Sky title or a Netflix one. We can help you. 3Vision help clients to build highly successful content businesses through a range of expert consultancy services. In our research sector we combine intelligent trend analysis and our deep industry experience to give your business expert insights. If you would like to understand pay tv operator and SVOD strategies or if you would like to receive a presentation of these results to your team, please get in touch. Contact us: Follow us: +44 1225 636 200 @3Vision [email protected] www.3vision.tv Insight - Sky Ultimate On Demand January 2019 10.
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