Sky joins Microsoft in video on demand deal
Five years ago such a deal would have been earthshaking when combined with the dominance of SkyDigital over everything else in the UK market at the time; ONdigital was moderately popular but was being rapidly crushed by the BSkyB steamroller that offered more channels and more sport and movies.
However a great deal has changed in the last five years. ONdigital (later ITV Digital) has now been replaced by Freeview; a service that has successfully attracted millions of people who are satisfied with a few more channels to watch and don't wish to pay for any more, and should overtake Sky in popularity sometime this year.
The rapid rise of broadband internet services has also provided fresh momentum for the cable companies, who also have their own networks for video-on-demand services. BSkyB may have had a cushy ride when it comes to satellite television, but it has to compete with BT and the cable companies in the VOD arena.
Microsoft's press statement contains the informative comment: "'Sky by broadband' will include hundreds of movies and hundreds of sports clips to download or stream"; the big problem is that BSkyB itself currently has little else to offer beyond whatever Fox in the US happens to offer at the time, and even that dominance is now likely to be uncertain.
As for the involvement of Microsoft, this isn't 1998. Even bigger trouble for BSkyB will occur if Apple launches a high quality video on demand service allied to the music market-dominating iTunes (iMedia?) which becomes popular and Fox in the US does a worldwide deal directly with Apple.
Inevitably future sporting and movie rights will become forced to spread across multiple platforms if something like this does happen.
So it looks as if BSkyB will finally be punished by the market for years of promoting other people's movies and sport as a means of developing a proprietary platform as opposed to (belatedly) establishing original content (one area where ITV at least still has the upper hand) that would have still proved profitable across a variety of delivery methods.
