Last week European Pay-TV firm Sky launched a streaming TV in the UK accompanied by its biggest-ever marketing campaign. Liz Duff, head of media and investment at Total Media, looks at how the hardware helps future-proof the business.
For many UK households, Sky is seen as the home of entertainment with its sports, movies, news and drama packages, but it has seen considerable competition from streaming services including Netflix, Disney Plus and Amazon Prime Video. Although these are technically accessible via Sky’s Q Box, the service hasn’t been directly associated with streaming until now.
The launch of Sky’s new smart TV, Sky Glass, last week has changed the company’s trajectory. While on the surface the product looks like a normal TV, it is intended to radically reposition the business for the streaming age. For example, unlike its previous offerings, Sky Glass works without the need for satellite dishes or set-top boxes and is completely connected to Sky’s services via the internet (via broadband it sells).
If the product becomes popular, then Sky will gain more control over the TV ecosystem and make its subscriptions more sticky. Sky Glass could also help the broadcaster gain leverage in talks with content providers in the fight for new shows, and potentially help it become the gatekeeper or aggregator for streaming platforms. However, making Sky Glass a success is easier said than done, and there still remain questions around the new product.
Make it make sense
Sky Glass appears to be the next logical step for Sky, as it attempts to diversify revenue and grow the business. However, despite seeming like the natural evolution in the broadcaster’s product range following the launch of Sky Q in 2016, making people jump from box-sets and satellite dishes to an expensive smart TV will be more difficult. Consumers infrequently spend money on big purchases like TVs, and convincing someone to ditch their long-used set-up will be hard.
However, that doesn’t mean it’s impossible. For example, nailing the fundamentals, such as ensuring a smooth and intuitive user experience, will be vital to the success of Sky Glass. This means focusing on making the signing-up process to Sky Glass as easy as possible, and making the UI so intuitive there is no need to look on other apps or devices, which is currently making the streaming market cumbersome. Having as few friction points as possible will shape people’s perception of Sky Glass as the easy-to-use single destination for their content streaming needs. The more frictionless the process is, the more quickly people will integrate it into their daily routines.
With cost being a major barrier stopping people from buying numerous subscriptions, Sky also needs to set Sky Glass at the right price. For instance, they need to highlight their flexible packages in order to appeal to different household budgets. This will ensure that they are appealing to the broadest number of people possible.
Furthermore, allowing people to pay for the Sky Glass set monthly means it can be made to look more appealing to customers. Monthly payments make paying for Sky Glass seem more manageable and better value. A powerful tool in selling any product is using the behavioural insight that people tend to overemphasize any sum quoted and place too little weight on the time-frame when calculating an item’s value. This temporal reframing can be used to shift people’s perceptions of cost. The shorter the time frame, the more appealing the deal becomes and more people are likely to invest as a result, hence why emphasizing a lower monthly cost rather than a one-off higher cost is the way to go for Sky.
How will this impact the future of streaming?
We’re now so used to the dominance of Netflix, Disney Plus and Amazon Prime that if Sky is going to make an impact in the streaming wars then it needs to make Sky Glass slick and simple – and it appears it is doing just this. According to reports last week, Sky’s smart TV will learn from viewing habits to make tailored content recommendations, something that audiences are crying out for. Making discovery of content easy has worked well for brands such as Spotify, and it’s becoming increasingly vital in this overpopulated TV content market.
With research showing that audiences feel paralyzed from the breadth of choice on streaming services, helping them make a decision will drive audience numbers and customer loyalty. It will also benefit Sky as it will keep customers locked into the Sky ecosystem, rather than looking for content elsewhere.
Sky Glass is launching at a time where it meets changing audience demands and behaviors. We know younger audiences are viewing less linear television than ever and are the most naturally accustomed generation to streaming their content. Traditionally, the older generation was loyal to linear TV, but lockdown has accelerated a shift among older audiences to other content sources, with over-55s now far more comfortable with using subscription streaming services, so it’s definitely now a reality. People want to watch their favorite content on the best screen available, and connected TV provides access to an array of high-quality TV content, both on-demand and live, in a laid-back living room environment.
One of the upcoming features of Sky Glass is the inclusion of a 4K camera, which opens up the possibilities of integrating video conferencing apps such as Zoom, and while streaming through a laptop or mobile is often a solo viewing experience, this technology opens up future potential for more group watching and engagement/interaction. Coupled with Sky’s extensive and lucrative sports content and big-ticket programming, this is a way to be prepared for the next evolution of streaming.
Ultimately, the streaming landscape is an increasingly fragmented market, so anybody who can provide an aggregated offering is going to be in the driving seat. There are only so many channels and providers that people can cognitively deal with, so consolidation is inevitable and Sky has made a major play to lead this offering. Nielsen data shows people don’t watch more than 15 channels on linear TV, no matter how many they have access to, with a core portfolio of about seven or eight. It’s clear and proven that we are creatures of habit – we go with what is easy, and the success of Sky Glass will depend on how well they can cater to these demands.