…Well, TV as we used to know it!

OfCom reported last month, following a decline in premium broadcast TV growth, that services like Netflix, Now TV and Amazon Prime now have more subscribers than ‘traditional’ pay TV, like Sky or Virgin.

The BBC summed it up nicely in this article.

But why is this?

There are a number of factors in play. One is good old price : Sky and Virgin can be expensive – very expensive if you pay for everything, especially sport. With a lot of their customers already Prime members, quite a lot of content is available for free elsewhere, for example Amazon showed Grand Slam tennis matches free for Prime members this year and YouTube broadcast the Champions League final live, in 4k, free.

Another factor is time-shift. The ‘watch when you want’ feature that drove the success of Sky+ is now taken for granted in the age of iPlayer and YouTube. Many kids just don’t understand that, only a few years ago, one had to watch a particular show just when it was broadcast. They find it frustrating enough not to be able to fast forward live TV, never mind having to sit through adverts!

What is most interesting, and challenging for the incumbents, is content. Netflix and Amazon are spending billions and billions of dollars creating new programmes, and buying the rights to winning current series or discarded, but well-loved, network shows. The Crown and Stranger Things show what can be done with the right budget and talent. Amazon are using this – very successfully – to drive acquisition and retention of Prime members for their core retail business, but for others TV is the ‘day job’. Now TV is Sky’s retention and long-tail play for those for whom Sky has got too pricey. The BBC, ITV and Channel 4 are in talks to create their own Netflix rival – especially powerful for overseas markets, hungry for more Downton Abbey and Luther.

Interesting times.