Friday, 18 April 2014

Unboxing Broadband, part 3: Even more TV, Now!

The breaking point was Game of Thrones. Sky has convinced us to pay for more TV than we can possibly watch.

The breaking point was Game of Thrones season 4. Until that point, we were happy with our thriftily constructed entertainment choices. We had cancelled LoveFilm (£9.99 per month for 2 discs + streaming) and took up the introductory Amzon Instant Video offer (£49.99 for Amazon Prime for first year). We were going to cancel our NowTV movies subscription before the introductory offer expired (£15 for 6 months). We were going to be happy with Freeview for regular TV (£0 per month). Our TV cost was going to be £50 p.a.

But then DW presented the business case that the NowTV entertainment subscription introductory offer of £4.99 per month was cheaper than buying the box sets of Game of Thrones, plus we could watch the new episodes live. And if we’re going to have the entertainment package, we might as well keep the movies package at £8.99 per month, because the children do so love watching the Disney catalogue. (And I admit, I was enjoying watching year-old movies as opposed to “classics”.) So now our annual cost has jumped up 436% to £218 p.a., all because of DW needing to see how the House of Lannister try to dismantle the House of Stark.

The lesson I take away here is that content is still king. Moreover, it’s not any one particular genre of content that is king, but the best of all genres. After all, my family is not interested in the most lucrative content type in the UK, premiership football (especially the way this season has turned out). But Sky still has enough of the best of the rest to make it compelling to our household.

Interestingly, it’s not the channel brand that is king, but the content itself. It is not the Sky Atlantic channel that we value. As far as branding is concerned, BBC is probably the only brand we follow. In other words, if we want a corporate recommendation, we’re more likely to choose something that is broadcast on a BBC channel, than any other branding. If we were to rank all our TV choices, it would go like this:

  • 1.     NowTV – either our current series obsession or a new movie
  • 2.     Something recorded on our PVR from Freeview
  • 3.     BBC iPlayer
  • 4.     Amazon Instant Video
  • 5.     Blu-ray or DVD or ripped movie from our private collection
  • 6.     BBC Four
  • 7.     Randomly finding a broadcast programme from the EPG

(As an aside, it’s the expectation of kingly content that makes technical outages all the more frustrating. The season opener of Game of Thrones broke both NowTV in the UK and HBO Go in the US. We were actually quite put out; DW and I had put the children to bed, we had a glass of wine in hand, and dark chocolate to hand, all ready for a quality night in. Instead, DW was on social media complaining and figuring out what was going on, and I was rebooting everything just in case the problem was at our end.)

That kind of stunning ARPU increase (average revenue per user, how the industry measures how successfully it extracts money from its subscribers) isn’t achieved by snapping up content rights alone. The second decision factor is always price. For us, Sky competed with free (Freeview) and still won, because the cost burden seemed a bargain. A monthly subscription of £14 seems cheap when Sky has set the expectation so high with its satellite pricing. To get an equivalent package by satellite would cost us £59 per month.

(Because the NowTV box was so cheap (£9.99), we’ve forgotten the infrastructure investment that we’ve made: STB, fibre broadband (£20 per month), and BT’s “tax” (line rental of £15 per month). Putting it all together brings our entertainment bill to £650 p.a.)

To make us take the plunge, Sky has been very clever and changed the narrative. Through its product positioning, Sky has convinced us that the discussion isn’t about whether we have enough TV through our current (cheap) means, but that we can have better TV with only a little bit more money. And in doing so, we get to feel like we’ve gone from Aldi basics to Waitrose finest. The funny thing for me is, even knowing that we’re being manipulated, doesn’t change the validity of our decision at all.

More in this series: part 2, part 4.

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