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Originally featured on BroadcastEngineering.com
Feb 1

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2/1/2013 9:39 AM  RssIcon

Pay TV operators have tended to resist pressure to offer premium content pay-per-view, except for occasional once-off events such as world championship boxing matches, out of fear this will cannibalize subscription revenues.

However, this attitude is now changing as operators come under pressure to compete in the expanding OTT arena, as well as smelling an opportunity to gain new customers and open up a fresh revenue stream. But, operators are trying to steer a delicate course to avoid tempting existing customers to trade down to a cheaper package and top up with PPV when there is an event they want to watch.

In the UK, BSkyB is attempting this trick by going halfway to PPV and offering access to all its premium content via a day pass costing £9.99 (almost $16) rather than separating out individual events. So, this is a short-term subscription rather than full-blown PPV, although it could prove a stepping stone in that direction. Also, the day pass only provides access to content OTT over the Internet, which includes smart TVs, but in effect restricts quality to standard definition for the present. So, Sky is, in fact, adding its sports channels to its online Now TV service, as of this spring, rather than making the day pass an option for existing subscribers to access via their satellite dish in full HD quality.

The strategy is fairly clear. On the one hand, it will certainly boost Now TV’s viewership numbers, which were only about 25,000 at the end of 2012, although the relatively high price tag will prevent the great surge that some have been predicting. But, what Sky is really hoping for now is that, on the one hand, the fact that it is only available over the Internet will preclude mass downgrades from existing subscribers of the premium sports package, which costs up to £52 ($82) extra for the full HD options. In fact, Sky is hoping the day pass offer will actually attract new subscribers seduced by the argument that having spent £10 just for a day they might as well splash out an extra £40 to get the content for a whole month in full HD.

At the same time, Sky is pitching the temporary pass as an ideal way of viewing longer lasting sports events, such as Formula 1 races or cricket matches, that can take up most of a day anyway. But in practice, the greatest appeal will be EPL football, especially on days when there is more than one live game, with people often sharing costs to watch the games together. Even so, the £10 price has already been criticized as too high by many potential subscribers, although that is precisely the calculation Sky has made, not wanting to give away its best content too cheaply, and, above all, protecting its current subscription base.

Whether this will prove successful remains to be seen, and that will partly depend on how rival hybrid DTT/IPTV operator BT Vision decides to package its EPL matches after August 2013, having acquired the rights to 38 matches of the 154 available for live showing over the three seasons 2013/2014 through 2015/2016. It is quite likely that BT Vision, with less to lose, will try its luck with full PPV, and it will be interesting to see how long BSkyB will be able to hold out against what is surely an inexorable trend.

Elsewhere in Europe, some football matches, albeit not as popular as the EPL, are already available PPV. In Switzerland, Telco Swisscom offers matches from the country’s top football league, the Raiffeisen Super League for SF3.50 ($3.15), along with some other sporting events at the same price. Europe’s top matches, from the EPL, Spanish La Liga, German Bundesliga or European Champions League, would surely cost more than that, but I could see them coming in at perhaps $8 to $10 PPV.

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