BSkyB tackles Netflix and Amazon with NowTV

BSkyB CFO Andrew Griffith recently announced at an investor conference that the time has come to hit the competition of Amazon and Netflix services head-on with a new service designed to reach 13 million homes. Rupert Murdoch’s News Corp. owns an almost 40-percent share stake in BSkyB, leading many to wonder if this is the big push the company needs right now to become a leader in mobile TV.

Netflix and’s Lovefilm services in the United Kingdom have had a running head start, and it’s going to take some gumption to play catch-up, but BSkyB thinks that the caliber of quality entertainment on the NowTV service could make it a definite player in the mobile TV and Internet space. The new service will start initially with films and then gradually branch off into more entertainment as well as sports. The plan is to get contracts in place, roll out content over time and build into a powerful network that U.K. viewers will want to watch.

Because the new network is Internet-based, it will allow lower initial cost than pay TV subscribers are accustomed to paying. Griffith mentioned in the conference that this new plan offers a substantial opportunity for the BSkyB brand and added that he currently has very happy subscribers with one of the world’s lowest churn rates. Low churn is important, as the current landscape is getting more and more cluttered with various TV services and options, and keeping subscribers needs to be the upmost goal in any long-term growth.

However, mobile and Internet TV is a completely different animal. And even though their subscriber base is getting more American content, such as “Glee” moving to Sky 1 as well as new HBO options, the addition of mobile content will take extra marketing effort to show how it will complement what subscribers are already receiving. British viewers on average watch four hours of TV a day, with 90 percent of their viewing habits spent watching live programming.

Griffith added that BSkyB in a better position currently than many U.S. pay TV operators are these days. In the U.S., there have been rising programming costs, as well as confusion and discussion over rights when content moves to new platforms. BSkyB has generally avoided this by including rights to new platforms in the initial content deal. It’s an important distinction, because the end result often means the extra licensing fees are passed on to the consumer. With BSkyB setting the parameters up ahead of time and negotiating from the beginning, costs can remain lower and content has a better chance of being available, as opposed to not being available and/or tied up in lengthy licensing negotiations.

Griffith wrapped up the investor conference by conveying that NowTV is slated to launched this summer, and plans are to develop and grow it during the remainder of the year and into 2013. With aggressive goals of launching into entertainment as well as sports options, the service could be a leading one to keep an eye on.