Free Premier League football will give BT a valuable broadband trump card over Sky, says Steve McCaskill
It’s not often that the marketing hype lives up to its billing, but BT’s decision togive BT Sport and live Premier League football to all of its broadband customers at no extra cost does indeed feel like a “game changer.”
Since 1992, Sky has dominated the pay-TV landscape, fuelled by the success of its football coverage, allowing it to expand into other markets, like telephone and broadband, offering customers ‘triple play’ packages that BT would not be able to compete with.
Virgin Media is also able to offer such packages through its cable network, while BT has attempted to catch up with BT Vision, a curious mix of Digital Terrestrial Television (DTT) and IPTV over its broadband network.
BT Sport lure
However sport is the biggest driver of premium television subscriptions and in that field Sky Sports is king. BT knows this, and lobbied Ofcom to reduce the wholesale price of Sky Sports 1 and 2, so that it could add it to BT Vision at a reduced cost.
However this was not enough to prevent the prospect of customers being lured away and so BT decided to bid for the rights to Premier League football outright, and won 38 matches at a cost of £246 million a season.
Sky still has 116 matches but, for the first time since the Premier League was ordered by the European Union to sell rights to more than one broadcaster, it no longer has first choice for all matches, meaning BT can show some of the most attractive fixtures.
Unlike ESPN and Setanta Sports, BT has the funds, desire and motive to compete with Sky, chiefly to protect its broadband business and tempt more customers over to its fibre service with free football. It is not competing with Sky as a channel but as a platform, something that ESPN and Setanta could not do. Indeed, the rights are simply too expensive for a television business to purchase.
News International won the rights to online and mobile highlights for the Premier League not to make money from them, but as part of an effort to shift tablet newspaper subscriptions for The Times and The Sun.
BT Sport will still be available to Sky subscribers and will be free via satellite to those who also have BT broadband, but it will not be available on Virgin Media at all and TalkTalk will also be left out.
Given that BT fibre packages start at £15 a month and copper services begin at £10, and Sky TV is considerably more expensive, it’s entirely possible that BT Sport’s rights portfolio might tempt some Sky customers to defect. Hardcore sports fans will continue to subscribe to Sky Sports, but more casual fans may no longer want to pay the premium.
There are also benefits to some businesses, mainly pubs and clubs. Many choose not to take out pub subscriptions with Sky due to the astronomical charges, but still show Free-to-air sport on the BBC and ITV. BT Sport pub packages will be 80 percent cheaper than those of Sky, opening up a huge market for BT.
All of this is speculative until BT Sport launches this Summer and Sky will doubtless move to protect its most lucrative business if it feels it is in danger. It has attempted to diversify into movies and entertainment in recent years, but it is still reliant on its sports channels and a price cut could be possible.
However at the moment it seems difficult to disagree with BT’s belief that this is the most significant change in the UK TV market for 20 years.
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