The ITV Doctor is in! BSkyB’s Hilary Perchard Goes Under The Hood with OTT

MPP Global Thursday, 14 August 2014

Exclusive interview in Interactive TV Today: ITVT Doctor, Rick Howe and BSkyB’s VP of Business Development, Hilary Perchard.

ITVT Doctor, Rick Howe writes:

At the TVOT 2014 conference in June in San Francisco, Over-The-Top delivery of pay-TV was THE topic of conversation. My “Virtual MSO” panel was packed, and one of our panelists (Paul Johnson from MPP Global) talked about their work with BSkyB’s “NOW TV” OTT service in the UK.Click here to view the video of that session.

And your friendly neighbourhood doctor will be continuing the OTT conversation at TVOT NYC later this year.

Following that session, I met up with Hilary Perchard, BSkyB’s VP of Business Development out of their San Francisco office. Hilary agreed to “get under the hood” for their NOW TV service with our readers.

iTVDoctor:Hilary, thanks for speaking with us. Let’s start off with a description of NOW TV, and how that differs from BSkyB’s satellite service.

Perchard:Unlike many US pay-TV operators, Sky is also a big producer of content with a range of sports, movies, family entertainment, drama, arts and news channels. We want to give people in the UK as many ways as possible to enjoy all that great TV. There are some people who want the full satellite experience with a DVR, HD, TV Everywhere and much more. However, we identified that there were other people who wanted more flexibility. The flexibility to dip in and out. The flexibility to take some content and not everything. That’s why we developed NOW TV. It’s an OTT service with a simple choice of a monthly entertainment and movies packs and/or a sports day pass. All with no contract and all available OTT, so no need to buy extra equipment. That said, we recognized that some people still needed a box to connect to their TV, so we partnered with Roku to launch a NOW TV box which is available from as little as £9.99. It’s just another way for customers to access our content in a world where there’s rapid proliferation of connected devices and platforms. And as the UK’s biggest investor in content, broadening distribution and access of our content is really important.

iTVDoctor: And just to set the landscape for our readers, can you take a moment and describe all the consumer services you offer in the UK?

Perchard:Sky is essentially made up of three main businesses. First and foremost it’s a content business with a whole host of channels across Sports, Movies, Drama, Family Entertainment, the Arts and News. Sky spends over $4 billion a year on content. Secondly it’s a content distribution business with two principle platforms–a satellite TV business with 10.5 million customers and a rapidly growing OTT business called NOW TV. Finally it’s a broadband and telecommunications player with over 5 million broadband customers.

iTVDoctor:One of the questions being asked here in the States is how the consumers will handle all the various and sundry pay-TV services in their home. During my TVOT panel I used the analogy of a future consumer’s “kitchen table” that had Amazon Prime, Netflix, Dish Network’s OTT service, HBO Go, ESPN and more. I suggested that service providers (like BSkyB) might become aggregators in the evolving pay-TV world, and provide marketing and billing services that would result in a single consumer bill. Sort of a dis-integration and re-assembly of the legacy pay-TV business. Is BSkyB, possibly through your NOW TV service, doing anything like that?

Perchard:In addition to the content that we produce and acquire for our own wholly-owned channels, we’ve also built our business on the back of being an aggregator of choice for other content owners–whether they happen to be free-to-air or pay. This simplicity and completeness of experience makes perfect sense to customers, and as a result, it works for content owners too, who see Sky as a natural distribution and retail partner. It also enables them to leverage our innovations, such as HD, video-on-demand and TV Everywhere.

That said, I do see a world where people might have a couple of subscriptions and we don’t see any harm in that. Remember, there’s a growing appetite from consumers to pay to access great content, so it’s an attractive market for people to enter into, and we can see that some of our customers are choosing to top up their experience by subscribing to other over-the-top services. It all makes for a richer TV experience.

iTVDoctor:Tell us a little about the decision to launch NOW TV. We’ll use the traditional journalistic criteria: WHY did you decide to go Over The Top? WHO made the decision? HOW did you come to the NOW TV product format? WHEN did you start working on it? WHERE is it managed (separate management team from Sky?)

Perchard:The decision to launch it was fairly straightforward. Our research showed that there was room in the market for another more flexible proposition, and once OTT technology had got to a place where the experience was good enough we decided to take the plunge. We started with our Movies pack. NOW TV really took off though when we added the Entertainment pack and launched the NOW TV box (a white label of the Roku box). We started working on NOW TV about 18 months ago launching Movies last Spring and Ents in the Fall. In terms of management it has its own MD and all of its own development and marketing teams, but still sits within our core business so that it can leverage everything we already know about pay-TV. The best way to think about NOW TV is simply that it’s the same great content, but we’re now in market with two separate yet complementary consumer brands. It means we can reach new market segments by having even more flexibility in the way we package and present our content.

iTVDoctor: Comparing NOW TV to your Sky service, what’s different in terms of rights, video content management, customer relationship management?

Perchard:We had already negotiated OTT rights for most of our content for our TV Everywhere proposition, Sky Go, and also built most of the backend, so that was fairly straightforward. For customer management we decided to go online, only reflecting the low touch OTT approach.

iTVDoctor:One of critical issues for established providers is the degree to which an OTT product cannibalises the current subscription business. How did you structure NOW TV in order to generate truly incremental revenue?

Perchard:As with most things, it’s not just one thing. Satellite Sky is the full-fat TV experience where 95% of customers have a DVR, over half of customers have used TV Everywhere, over half have HD and many have bundled broadband and telephony from Sky for a great value “triple-play” bundle. NOW TV doesn’t have this. It’s just the content. And it’s marketed differently to different people. It’s worth remembering that in the UK–and, in fact, across many European countries–pay-TV is in structured growth, so for us, we simply see it as creating competition in the UK market with two consumer brands, each of which appeals to different groups of people. NOW TV is additive to existing offerings–helping us grow our business and reach new customers.

iTVDoctor:If you were putting NOW TV together today, what would you do differently? What advice would you give to your US friends?

Perchard:The great thing about OTT is the amount of data you get back on what people are watching and how they are using it. For that reason we are always making tweaks and adjustments–trying new things, keeping the things that work and ditching the things that don’t–it’s much more like a start-up culture but with the safety of the mothership nearby. In terms of advice, I guess one of our biggest insights is whether it’s OTT, satellite or cable, TV is still TV, so its best enjoyed on a big screen and still needs to be a fun distraction at the end of a long day at work. OTT services need to get on the big screen and stay easy to use.

iTVDoctor:Thanks! We’ll be continuing the Virtual MSO/OTT conversation at TVOT NYC this fall. I hope you’ll join us.

Perchard: Look forward to it!