Market Insight

Sky launches satellite TV alternative in Austria with Sky X

March 06, 2019  | Subscribers Only

Max Signorelli Max Signorelli Research Analyst – Home Entertainment, IHS Markit

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European pay TV group Sky has launched a new standalone virtual pay TV service in Austria. Sky X provides access to live TV channels across all genres as well as on-demand content, dependant on the subscription tier chosen.

At launch, Sky X offers three tiers for either Sky Movies, Sport or a combination package priced at €19.99 (with a 14-day free trial), €24.99 and €34.99 per month respectively. As well as Sky’s own channels, all packages provide access to free TV channels from the likes of ORF and RTL, as well as pay channels such as Discovery, Fox and Cartoon Network. In accordance with EU regulation, Sky X is accessible for Austrian subscribers throughout European Union member states to watch for up to 30 days.

Sky X is accessible via PC and Mac, Android and iOS apps as well as through LG and Samsung smart TVs and PlayStation 4. Furthermore, Sky are offering their plug-and-play Sky X Streaming Box for a one-time payment of €49.99, or €19.99 if purchased in conjunction with the combination Sky X package.

Our analysis

The latest launch in Sky’s ongoing OTT expansion strategy delves far further into the world of virtual pay TV than its Sky Ticket and Now TV brands currently active across Sky’s markets in Europe. These services offer tiered access to either library content or specific Sky and third-party channels, as opposed to a full pay TV package. In Austria, Sky Ticket continues to operate and is likely to continue to do so owing to this variance in offerings. Such an expansion of Sky’s virtual pay TV portfolio is a significant change as their OTT packages begin to compete directly with traditional pay TV packages. What sets these OTT offers apart from pay TV offerings is the lack of contractual commitment, with customers able to cancel services monthly, without having to commit for 12-24 months.

With the launch of Sky X, Sky becomes one of the first operators in Europe to offer a standalone virtual pay TV package with a scale of content comparable to pay TV services – blurring the lines between what is expected from OTT and pay TV services. One of the few major competitors in the Austrian OTT market is incumbent telco A1, which offers its recently revamped A1 Xplore TV package. However, this package is bundled exclusively to A1’s mobile customers, and offers far fewer channels, both premium and otherwise. Despite this apparent lack of direct competition, IHS Markit believes that uptake will be slow, due to the relative expense of Sky X, both compared to OTT and to the pay TV market, where willingness to spend remains fairly low. Pay TV penetration in Austria is close to 52%, while ARPU in Austria is currently under €25 per month – and in fact closer to €20 without taking Sky into account. On this basis, the pricing of Sky X would appear to target a higher tier of audience, which in Austria consists primarily of Sky’s customers, both direct via satellite and on cable/IPTV on a third-party basis. As a result, the cost of Sky X may rule out the service winning over Austrian customers using free TV or basic cable services only. However, on the other hand, the convenience of being able to access Sky’s premium content without the requirement of a satellite dish or a cable/IPTV connection may work in Sky X’s favour, since it presents a more flexible alternative to DTH for Sky customers. A switch to OTT based virtual pay TV services also provides cost savings - both to the consumer in terms of installation costs, and Sky in respect to fees to satellite providers such as Astra. 

As Sky’s smallest market for both pay TV and OTT, the launch of Sky X in Austria can be seen as a proving ground for Sky’s fully-fledged TV services in an OTT context. The timescale for such an offer being rolled out in other markets is currently unclear, with challenges likely to vary from market-to-market. For instance, outside of Sky Deutschland's current subscriber base, the abundance of virtual pay TV services in Germany may prove difficult. In the UK, Italy or Ireland however, where pay TV ARPUs are higher and fewer services of Sky X’s ilk exist, there is potential for Sky to win over a new generation of TV subscribers, or provide existing DTH customers with a more convenient alternative. 

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