Market Insight

Sky continues to reassert premium TV leadership with UHDTV service launch

July 14, 2016  | Subscribers Only

Ted Hall Ted Hall Director – Research and Analysis, Service Providers & Platforms

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UK pay TV market leader Sky today unveiled its long-awaited 4K ultra-high-definition (UHD) TV service, which the operator will launch on the Sky Q platform in its home market and Ireland on 13 August.

The launch date will coincide with the start of the new Premier League season. Sky will air 124 matches in UHD in 2016-17, with further sports coverage including all F1 motor races. The content offering will also feature on-demand access to more than 70 movies, including premieres of Spectre, The Revenant and The Martian, as well as a selection of library titles. Entertainment content will include original drama The Young Pope, US acquisition The Blacklist and comedy The Trip to Spain. This will be available alongside natural history and documentary programming, and other non-fiction content from Sky Arts.

Sky’s UHDTV service will be exclusive to customers of its Sky Q Silver premium TV service, launched in February. Subscriptions to this tier of the product (Sky Q is also available with a non-UHD-enabled set-top box) start at £56 ($74) per month, with the Sky Sports and Sky Cinema packages costing an additional £27.50 a month and £18 a month respectively, or £36 for both.

Unlike Sky’s HDTV and 3DTV service launches, UHD content will not be featured on traditional linear channels – live events will be broadcast via satellite feeds accessible from the Sky Sports HD channels. Other content must be downloaded to the set-top box via an IP connection, as Sky customers have become accustomed to do with Sky On Demand. UHD downloads will take longer, though, with files in this resolution typically around three times larger than their HD equivalents.

Sky is planning UHDTV launches in its other European markets but has not specified a roadmap.

Our analysis

The launch of Sky Q, an impressive ‘next-generation’ TV play from Sky earlier this year, went a long way to re-establishing the operator’s innovation leadership. The missing piece of that new offering was UHDTV. Its absence would certainly have been far less conspicuous had pay TV arch rival BT not beaten Sky to the punch and launched its own UHD offering in August 2015. It has taken Sky a year to respond, but what it has come to market with compares more than favourably with the competition.

As has always been the case with Sky, premium movies and sports are at the forefront of its offering. In terms of sports, the key battle ground with BT, Sky has trumped its rival, which, in its own words, offers approximately one live UHD event per week across the season, including football from the UEFA Champions League, Premier League, UEFA Europa League and FA Cup competitions. Sky’s combined 124 live Premier League matches and 20-odd F1 races clearly exceeds this.

Movies is the area in which Sky has really differentiated its offering. Leveraging its strong relationship with its Hollywood studio partners, the operator has secured an attractive range of UHD movies, which will serve to further bolster its recent Sky Cinema rebrand of its premium movies service.

Where Sky’s UHD offering perhaps compares less favourably with the competition – at launch at least – is in the entertainment programming portion. Here, streaming rivals Netflix and Amazon have a greater range of programming than Sky, built around their respective original series, such as House of Cards, Daredevil and Marco Polo (Netflix) and Alpha House, Transparent and Mozart in the Jungle (Amazon). This is particularly significant given BT’s partnership with Netflix (available in 4K via BT’s UHD set-top boxes), which gives notable weight to the IPTV operator’s UHD package.

Pricing-wise, both Sky and BT have clearly positioned their UHD services as premium offerings. Sky’s carries the heftier premium, though – customers wishing to watch live sports and download movies in 4K will need to subscribe to a Sky Q TV-and-broadband package costing £114.40 a month. BT customers seeking the full UHD experience, meanwhile, will need to subscribe to a bundle costing £63.98 a month, which includes the Total Entertainment TV package, unlimited broadband and Netflix’s Premium tier. Such a comparison is complicated by the broader product offerings, though, with the premium service offered by Sky Q, a product built around the ‘Fluid Viewing’ anytime-anywhere content experience, the main reason for the disparity.

Though they are expensive – from traditional pay TV providers, at least – take-up of UHDTV services will start to gain traction at a faster, though still relatively slow, rate now that the country’s largest operator has entered the fray. Its second largest, cable operator Virgin Media, is set to do so later this year, when it is expected to launch a 4K-ready set-top box of its own. The addressable market for UHD services remains small, though – IHS Markit puts the installed base of UHD-ready TV sets at 1.3 million at the end of 2015, which we forecast will rise to 2.77 million by the end of this year.

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