BBC and Sky Collaborate to Fend off Common Foe
The BBC and Sky have signed a new deal that will see the two broadcasters collaborate across content and technology.
Sky Q customers will have access to the iPlayer app and BBC digital interactive red button, while the BBC is to experiment with Sky's AdSmart addressable advertising platform to run personalised promotional content.
The deal fits the wider drive by UK broadcasters to defend their position against the rising tide of streaming services.
"It's a sign of the times," says Paolo Pescatore, analyst at PP Foresight. "The tie-up builds on Sky's approach to aggregating a wide range of services. More importantly for the BBC, it will enhance its quest to break down the barriers to adoption of BBC services on other platforms. It's a win for consumers."
The collaboration means Sky users will now be able to access the iPlayer app directly through a specific button on the main menu page.
Using SmartAd data, the BBC will trial targeted trailers to viewers watching BBC channels through Sky+ or Sky Q boxes—about 13 million households. The promos would be shown during breaks between programmes when watching BBC channels live.
In a press statement, Sky said the two broadcasters were also exploring other ways they can work together, including the possibility of making audio/radio app BBC Sounds available on Sky and NOW TV.
Addressable linear is a bigger and more strategic prize for broadcasters than SVOD ads, and Sky holds the key.
According to Enders Analysis, in the context of dwindling linear viewing and rocketing online video ad spends, "the adoption of Sky AdSmart and similar services on YouView and Freeview could take addressable TV ads from a sideshow to a pillar of revenue."
A study released by Sky in August suggested addressable TV cuts channel switching by half (48%) and boosts ad engagement by more than a third (35%). It has created 17,000 campaigns for 1,800 advertisers since AdSmart launched five years ago. It is expected to reach 60% of UK households by 2021.
In September, Sky signed PSB Channel 4 to the platform.
"All eyes are now on the remaining sole PSB yet to support AdSmart," said Pescatore.
ITV has resisted. The commercial broadcaster is using its own addressable technology in partnership with Amobee to allow advertisers to target the 30 million viewers signed up to its catch-up service, ITV Hub.
However, all of this is a drop in the ocean compared to the grip which Facebook and Google have over the UK ad market. According to eMarketer, the U.S. tech giants will command 68.5% of the £14.56bn ($19.41bn) UK digital ad market this year-a figure expected to surpass 70% by 2021.
BritBox to the Rescue
Last week, ITV, BBC, Channel 4 and Viacom-owned Channel 5 launched SVOD service BritBox. It costs £5.99 ($7.60) a month for HD and multiscreen and contains mostly archive programming from the UK broadcasters.
It carries a different content catalogue from the BritBox service that BBC/ITV launched in the US and Canada two years ago and which has amassed 650,000 users.
Samsung will feature BritBox as a ‘Recommended App' on its Smart TVs and mobile operator EE, owned by BT, signed as exclusive mobile partner for the SVOD.
Deltatre is providing the user experience platform for BritBox (which it already does for US version); Irdeto has the security piece and LoginRadius is responsible for customer relation management and the BritBox access management platform. Akamai is providing the CDN.
According to Enders, ITV's investment in the service is "modest when compared to its global competitors—up to £25 million in 2019, £40 million in 2020 and declining thereafter—but it is a prudent low-risk entry."
While BritBox is being pitched as complementary rather than a rival to Netflix and Amazon, there are questions about whether the British consumer is prepared to pay again for content they may feel they've already paid for via the licence fee.
The obvious criticism, notes BBC media editor Amol Rajan, is that it contains a lot of repeats which "means the user experience and a high quality of curation will be vital."
He adds: "The broadcasters have been in negotiations for years, because they have very different needs and interests. The BBC wouldn't want to damage iPlayer too much. ITV, Channel 4, and Channel 5 need to keep their advertisers on side.
"That they have all reached agreement despite these different priorities shows they feel they simply have to make a big, joint play in the streaming market."
Sky—now part of Comcast—has also made moves to shore up its audience. Last month, it began trailing live streaming news on Amazon's Twitch and separately agreed to extend its content deal with HBO.
In March it struck a deal with NBC Universal to bring AdSmart to U.S. clients.
Additionally, Sky has signalled its intent to challenge BT Sport for rights to the UEFA Champions League. Bids for the three years of rights to the popular soccer tournament from 2021/22 are being submitted today. BT Sport paid over £1.2 billion for exclusive rights to the last round.
The BBC recently said that if it wanted to launch a subscription service, it would have to cost twice as much as Netflix. So how can new entrants compete in a market that's already full of top-tier SVOD services?
British broadcasters have made separate moves to advance ad-tech in a further defence against online competition but questions of scale, cost and measurement remain.
Sky's Deepa Kutty talked about the competition from Netflix, YouTube, and Amazon as part of a deep dive into the importance of innovative approaches to advertising at Streaming Forum
In this Streaming Forum keynote preview, Sky portfolio & program manager Deepa Kutty shares the broadcaster's current and future plans for targeted programming and advertising