Sky new strategies and the dimensional factor

Blog article
Bruno ZAMBARDINO

sky_vr_studio_evi_17_03_16In recent weeks Sky has carried out a series of operations of great interest especially if framed in the light of the new Post-European Integration course that has led to the creation of a media company with a catchment area of more than 20 million families. Thanks to the economies of scale linked to the process of aggregation of the 5 pay TV (UK, Germany, Italy, Ireland and Austria), the group is now pushing on the investment accelerator, well aware of an increasingly wide and diversified competitive environment that will lead it to measure itself with the new players of connected audiovisual (Amazon, Netflix, Google) but also with "traditional" subjects capable of evolving and expanding rapidly with a view to greater consolidation. The reference is obviously to vivendi's dynamism and strong interest in the strategic assets of our industrial supply chain, from network control (Telecom) to synergies with platforms (Mediaset Premium ?) to content presidium (Zodiak, Gameloft, Cattleya?). A magazine French has pompously called it the new Battle of Italy.

Returning to Sky, the new open fronts concern at European level the entry into the virtual reality business and at home the enhancement of the online offer from a technological point of view as well as the creation of an ad hoc structure in the field of direct cinema distribution in competition with Medusa and Warner. But let's proceed in order.

A couple of weeks ago the Group's official entered into the market of virtual reality. For two years Sky had been financially supporting an American external company specializing in 360° production (Jaunt). But now it has announced the activation of its own production unit (VR Studio), which will be entrusted with the task of creating "immersive" content that can be used through the special viewer connected to the smarthpone. The first videos will cover the Formula 1 trials in Barcelona but by the end of 2016 the content produced and broadcast in VR will be more than 20 and will range from cultural events to great sports classics (from boxing heavyweights to the Tour de France). If the first films are distributed only via the Facebook 360 Video platform, they will soon also be compatible with the Oculus platform while at full capacity they can be accessed via a purpose-built vr content app: Sky VR.

As has been correctly pointed out, Sky's entry into the world of virtual reality has an important market value: considering that the success of the technology is mainly given by the availability of content, relying on a broadcaster of this magnitude could make a difference. According to some estimates made by Superdata, the virtual reality business will be worth this year at 3.6 billion dollars (a market of 22.9 billion is expected by 2020).

A business that appeals to many brands as an innovative marketing and promotion tool. According to a recent staff search ad published by Amazon, the online sales giant is also looking for staff "to explore and create platforms and interfaces that make immersive storytelling possible". These first tests can currently be seen free of charge, but once in place (if the market feedback is positive and convincing) the group will use the technology as an integral part of its offer to improve the vision by asking the user for an additional payment for this new opportunity to use it.

Same philosophy at the basis of relaunch of Sky's Internet TV (Sky On line) which will soon be renamed with the same brand present in the UK or Now Tv and with the opportunity it should have a larger offer of pay content than the current one and a remodulated price list. So far Sky's OTT offer has been characterized by a certain amount of caution perhaps also to avoid the risk of cannibalization with traditional pay users. But at this stage a change of pace is expected not only to face netflix's competitive challenge, but also in view of a likely Vivendi/Mediaset integration. After the summer, Sky will equip itself with a new set top box (produced by Roku) able both to connect to the Internet, to allow access to the channels included in the package and on-demand content, and to receive digital terrestrial channels. It is a different device than the one connected with the Sky Q offer launched in the UK and coming to Italy next year. As well explained by Italia Oggi you can think of three steps of the Sky offer: at the Sky Now TV base with the new Roku, in half the classic hd+on demand satellite offer and at the top the premium sky q in which ultra hd channels will also appear. For the Peninsula it is not yet certain whether the launch of the new device will take place at the same time as the rebranding or whether the results of the British launch will be expected first. At group level, Sky Now is an important offer, because 90% of customers obtained through it had never considered before approaching a normal Sky subscription. But to raise the quality of home entertainment, it's strategic to have more control over the production and distribution of valuable content. For this reason, according to the Sole 24 Ore Sky Itali is about to enter the film distribution, starting a series of negotiations with major audiovisual producers including Cattleya, Lucisano Media Group, Wildside, Palomar and Indiana Production. An operation designed to increase the degree of competition in a sector that is sufficiently concentrated and capable of disappearing the cards, opening the door to a new and more dynamic phase of development in the exploitation of rights on the various platforms. Sky's goal is to establish an ever closer relationship with Italian cinema in a phase of relaunch linked to the ongoing reform process (currently under discussion in Parliament) and in view of the immininete renewal of the rai concession. In short, a sort of distribution consortium participated by the broadcaster and the producers could come to life, in direct competition with Universal and Warner Italia The latter distributes many Italian titles, selling the TV rights to Mediaset, with which Warner has a multi-year agreement until 2020 to exclusively broadcast the films and series of the Hollywood major.

Three strategic areas of intervention that show a firm desire to increase their size and make economies of scale by investing in new technological devices capable of enriching the consumer experience and in original content of cross-platform quality. In a recent Repubblica interview, CEO Zappia stated that his company is ready to invest 7 billion in the next 4 years in our country. Provided that we operate in a market with clear, certain and equal rules for all. A scenario that in Italy offers wide margins for growth.