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MediaMay 5, 2017

Sky has a great, foolproof plan: turn off the internet

Trash can filled with computer tower, monitor and keyboard
Trash can filled with computer tower, monitor and keyboard

Pay TV giant Sky has just pulled the handbrake on its online sports service Fan Pass, as it nearly doubles fees and removes daily and weekly options.

A little over two years after the launch of Fan Pass, its unbundled sports package, Sky TV looks like it’s actively trying to destroy the service with a round of access changes and price hikes rendering it essentially the same price as a full terrestrial MySky subscription.

As of May 24 – tellingly a week out from the Lions series kickoff – the service will cease to be available as a day or week pass, and the monthly cost will almost double, from $55.99 to $99.99. That’s $20 more than basic Sky with the Sky Sports package.

Subscribers were emailed this afternoon, reported the NBR’s Chris Keall, and have responded with predictable fury on social media. The move suggests that too many of its customers were cutting the satellite TV cord and buying sports event-by-event for the company to bear. Yet while there might be short-term wins for Sky as desperate All Blacks fans either pay for a lengthy package, or resubscribe to the satellite service, the long-term implications are bleak.

While all legacy media companies are in various stages of pivoting to meet the future, Sky appears to have frozen halfway round and decided to turn back. And while there is likely to be a sugar rush of revenue, perhaps the reason the market has sent its shares up 2% since word of the email became public, the move has a funereal quality, too.

It seems to be saying to customers that it doesn’t want to sell them content online – an arena it has found difficult both philosophically and technically for years – and will instead obstinately stick to the distribution method it came into the world with three decades ago.

The move is understandable in some ways – sports rights are phenomenally costly, with competition for rights packages coming from venture-funded startups like Rugby Pass (which offers all rugby and league competitions online for around NZ$20 per month, and which – disclosure – is a Spinoff custom client) and newly content-hungry telcos alike. Yet with it Sky seems to be saying that the online battle is not one it wishes to join, instead attempting to use price as a weapon to force potential customers to revert to pre-internet behaviour patterns.

Unfortunately for Sky, while its online competitors are far leaner to operate and thus offer cheaper services, it’s not just price driving the move. The customer experience of watching whatever, wherever and whenever you want on any device with a slick accessible interface is a huge part of the appeal. And no amount of price-ratcheting will change that.

The sports organisations, particularly rugby, that have become dependent on Sky revenue might be applauding the defence of the value of their product, and are likely to have been consulted. And it’s undeniable that Sky has done extraordinary things for sports of many stripes in New Zealand on the revenue front, and that screening them is an incredibly expensive exercise in any number of ways. Yet any rights-holder applauding seems shortsighted. If you fence pay TV sports off from younger demographics for long enough people will simply lose interest, and head for more accessible sports in this globalised market, or away from sports entirely. Dwindling rugby crowds suggest this is already happening in New Zealand.

There is a chance this a purely mercenary move to capitalise on the Lions tour, one which will be quietly rolled back after the rugby season finishes in November. But if it is what it presents as – a bigger retrenchment from the internet itself – then it looks like Sky essentially admitting defeat. That it is committing to the steady maintenance of its existing ageing customer base, rather than investing in the more difficult – yet existentially essential – task of building a future-proofed business online.

The Spinoff Media is sponsored by MBM, an award-winning strategic media agency specialising in digital, with vast experience across all channels. We deliver smart, tailored media solutions as well as offering a leading data and analytics consultancy. Talk to us about your communications challenges and how MBM can help bring you success through the power of media and technology.

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