Sky's Television Monopoly

[DJ Baz]

I've been thinking about this a lot recently... do Sky effectively have a monopoly over the subscription TV market?

Consider who their competitors are:

The BBC are one of the biggest content producers in the world, but they are funded in a completely unique way and have to provide their content freely to their license fee payers (practically everybody).

ITV once were a competitor when they bought onDigital, but they tried to take on Sky on their own game (exclusive sports rights) and lost, so they went bust.

Ntl and Telewest are probably the most obvious competitors, but they are limited by two things: firstly they rely on their cable networks, which means they have practically no coverage outside urban areas, and secondly they produce very little content of their own, which means they have to buy content from Sky at a price of their choosing.

Then there's Freeview, which has seen a huge boost in sales recently, giving it roughly the same number of viewers as Sky. It can hardly be regarded as a competitor, though, because even if we overlook the fact that Sky have a sizeable stake in it themselves, it is rather committed to being a free service, and therefore can never provide the same amount of content as Sky.


So, we have Sky with eight million subscribers and 98% coverage, compared with 75% for Freeview and obviously much less for cable, and no real competitors to speak of. Sounds like a monopoly to me.

The other thing is that they control not just the delivery system, but the content as well. They don't produce nearly as much original content as the BBC, but they do have the power to outbid just about anyone for the latest US drama series, big Hollywood movies and live sports. All stuff that people want to watch, and the only way to get it is through Sky.

What's the effect of this for the consumer? Well, not only do we not have fair competition to drive down prices, but Sky even have the power to control our perception of subscription TV. The truth is, we don't know the true cost of the television packages we pay for, because for as long as we can remember, Sky have told us how much they cost. Remember that Sky's revenue comes from advertising as well as subscriptions, and how many TV networks in the world manage to be hugely successful on advertising alone.

And let's take a closer look at this subscription business. Firstly, they come in packages where you can flick through dozens of channels of dross before you find maybe a couple that are worth paying for. Surely by now you should be able to choose exactly which channels you want to watch from one day to the next, on a pay as you go basis? Secondly, they charge you extra fees for very dubious services. How do they get away with charging £10 a month for Sky+, which as far as I can see is just a piece of hardware? It's like buying a VCR and then having to pay a monthly fee to Sony if you actually want to use it to tape anything. The only additional service you get is an extended EPG, which, by contrast, Freeview manages to provide for free. And as for Multiroom, provided I have enough Skyboxes, surely I should be able to watch my Sky package in as many rooms under my roof as I like, shouldn't I?

In my view, Sky are a monopoly, and this has lead, unsurprisingly, to some rather questionable business practices. Monopolies must be dealt with in one of two ways: they can be broken up, or they can be regulated. What you can't do is just leave them too it - because they will consolidate their position to such an extent that nobody will ever be able to compete with them in the same market again.

What does everyone think about this situation? Do you think they should be broken up or regulated, and how could this be done? What does the future hold? Will broadband TV be able to mount some kind of challenge to Sky's dominance? (Although I note that Sky are already branching into this area... )

 

[Tesla]

I do not think Sky have a monopoly as such.

I think they are similar to Microsoft. They came up with the best idea first (well maybe no first but went the best way about it) and have sold it correctly.

I view them as a succesful, intelligent business as apposed to conning everybody.

There is nothing stopping other companies from broadcasting Sat. signals over the Uk.

The NTL/Telewest arguement is a poor one as it's their own technology which limits them.

Nothing forces you to use windows, some people use other OS's with much success.

Likewise with Sky. You can go and buy a freeview box, or a FTA/FTV sat receiver and watch other companies stuff.

However, at the moment they have no major rivals.

 

[DJ Baz]

I'm not saying they're conning everybody - well actually I guess I am kind of saying that, but that's not the point.

What I am saying is that, objectively speaking, Sky are a monopoly and need to be regulated. I know it's not strictly speaking their fault that no one can compete with them, but that's like saying that we should not regulate water companies because it's not their fault that they are former nationalised companies and no one could ever realisticaly set up in competition to them.

True, you can't really blame Sky, but the monopoly exists and monopolies are surely bad for the consumer. Therefore, something needs to be done about it.

 

[tsinc80697]

Never really thought about Sky being a monopoly before, but i suppose it could be said they are in satellite area of television as i don't even know of anyone else that provides an alternative via satellite.
Even if they were seen as a monopoly on the main market, i can't see anything wrong with them as what they are producing seems to be at a decent price with decent service, similar to what i thought of Microsoft when they went through the big debate over being a monopoly, it may be seen as unfair to competiton, but in both situations they got out ahead and produced the best "goods".
But at the end of the day, if you don't want Sky, don't get it, you can get the same channels on different prodivers or just stick with the normal terrestrial television.
Surely there isn't a monopoly over the channels as such, as the channels that only they have(sky sports, sky movies) are of their own creation, it's not like they are stopping people from having similar ones on their service, they just don't want to distribute their own channels to competitors.

 

[tom_nieto]

Then again, once you take the BBC and terrestrial channels off sky it doesn't look like such an attractive package. There is such a bunch of crap shown on the majority of sky channels that you've got to ask yourself "is it worth it?". If you're in to movies, DVDs do pretty well, and if you've got a good HC setup will provide a better viewing experience. Sport, yes it's an advantage, but again, there's a whole lot of crap on, and for the big matches a pub is often better anyway. The rest is utter dog turd. The documentary channels are ok, but if you're that interested then buy a book. A lot of the documentaries are awful, repeated endlessly and are almost mind numbing in their presentation. Nothing but background viewing for the most part.

 

[clockworks]

There is no chance of Sky being regulated. Murdoch has the ability to make or break Governments, via his political propaganda department, AKA "The Sun".

He backs the current Government (or whichever party he feels should win the next election). In return, they leave him alone to rip us off.

To be fair though, Sky are now promoting Freesat.

 

[memphisto]

it could change in the next few years though.

NTL : telewest have or are in the process of merging with Virgin which will give them a lot more flexibility in terms of breaking into the Satelite market

then theres homechoice which currently only operate in certain areas but they also offer same sorts of pacvkages as Sky.

as well as that aren't BT going to be doing TV soon ?

 

[Spanker]

The BBC are one of the biggest content producers in the world, but they are funded in a completely unique way and have to provide their content freely to their license fee payers (practically everybody).

Freely? How can it be free when we pay the license fee? Isn't it the fee that funds the BBC?

 

[DJ Baz]

Freely? How can it be free when we pay the license fee? Isn't it the fee that funds the BBC?

Sorry, yes that does sound a bit confusing. What I meant was freely in the sense of "freedom", that they have to make sure their license fee payers can access a their content through as many different means as possible, Freeview, analog, Sky, the internet etc. They have a royal charter as a public service broadcaster and by law they have to fulfil this role.

In any case, the point is that they can't be considered a competitor as such, because they are uniquely funded. The license fee is practically a tax, and everybody has to pay it regardless of whether they want to watch BBC or not - even if you have Sky.

 

[DJ Baz]

Never really thought about Sky being a monopoly before, but i suppose it could be said they are in satellite area of television as i don't even know of anyone else that provides an alternative via satellite.
Even if they were seen as a monopoly on the main market, i can't see anything wrong with them as what they are producing seems to be at a decent price with decent service, similar to what i thought of Microsoft when they went through the big debate over being a monopoly, it may be seen as unfair to competiton, but in both situations they got out ahead and produced the best "goods".
But at the end of the day, if you don't want Sky, don't get it, you can get the same channels on different prodivers or just stick with the normal terrestrial television.

They probably don't have a monopoly over the entire television market, but subscription television, I think they do. There is clearly a market for television over and above the license fee entitlement, and Sky are the only real provider.

Even if you live in a cable area, you are still effectively buying Sky channels, only more expensively, because you have Ntl/Telewest as middlemen. Apparently Sky charge Ntl the same per customer for their channels as they do their own customers - so they are never going to be able to compete on price.

Surely there isn't a monopoly over the channels as such, as the channels that only they have(sky sports, sky movies) are of their own creation, it's not like they are stopping people from having similar ones on their service, they just don't want to distribute their own channels to competitors.

That's part of the problem though - they do have a monopoly over the content. Sky don't actually produce that much television of their own, most of their channels are really just delivery systems for the high-demand premium content that they have bought in. They have exclusive rights to practically all football, ever... all the big Hollywood movies, and the big US dramas like 24. Also, Sky One gets good viewing figures because unlike the BBC and independent terrestrial channels, they don't have to provide a certain amount of public service or educational/religious programming - so they can show The Simpsons and Star Trek all day long...

Perhaps the answer lies in breaking their stranglehold on this content. Do away with exclusive rights for Premiership football matches for example, and make it so at least 2 broadcasters can show every game. That way, somebody with some fresh ideas and some money (like Branson) can come along, set up their own delivery system showing the same matches for cheaper, and before you know it you've got a price war on your hands. Then we'll see what the true price of subscription TV is.

 

[Radiation]

I agree sky take advantage and keep bumping up the prices with little or nothing worthwhile in return.

The changes I would like to see are...

1. Adverts on sky owned channels should go or be reduced, its fine on non sky owned channels if that's how they make their money but to have both a subscription and adverts is just greedy and annoying, I remember the idea that if you pay for something you won't get adverts shoved down your throat, anyone else?

2. Sky+ fee should be scrapped as it costs them nothing to allow a hardware function to work and we pay for that hardware.

3. Multiroom fee should also be scrapped or cut in half as it costs them nothing really, we pay for the extra box and its just a bit greedy.

4. Subscription should be reduced and only goes up with inflation, why does it go up when we get nothing in return except rubbish quiz and shopping channels? I thought costs go down over time as technology improves and anyway it costs the same to transmit from the satellite over the uk for one thousand people as it does for one million people so why not reduce prices and have more people paying less instead of less people paying more?

5. Better choice over what channels to receive, I would be happy with about 20 decent paid for channels that are actually good and not hundreds of useless crap thanks!

There may be more but that’s all I can think of for now, if sky made these reasonable changes everyone would benefit and sky would still make a good profit I bet.

 

[WIBSBOT]

I think that Telewest owns a large part of Flextech which does produce its own programs (albeit some quite bad) and sells these to Sky...

Ftn
Bravo (and Bravo +1)
Trouble (and Trouble +1)
Challenge (and Challenge +1)
LIVINGtv (and LIVINGtv +1 and LIVINGtv2)
Player (TV channel)

and also half of these with the BBC...

UKTV Bright Ideas
UKTV Documentary
UKTV Drama
UKTV Food
UKTV G2
UKTV Gold
UKTV History
UKTV People
UKTV Style
UKTV Style Gardens

so not quite in the same league as Sky but Sky and Telewest/NTL/Virgin all rely on each other to provide channels and also to distribute channels. Sky have more coverage but Sky cannot provide broadband without reselling ADSL, whereas Telewest can now provide all the main services - TV, Phone, Broadband and Mobile coverage and are going to be a serious player. So, imho Sky are not a monopoly - however, BT are - even more so if they start selling a TV service.

 

[Shimmyhill]

They are not a monopoy, its a free market and anyone can compete with them.

Ntl/Telewest are far more evil in their business practise - they only operate where thay can make money. If anyone needs to be regualted its the cable companies.

Sky innovate, spend lots of money on new products (Sky BB for example, HD, Sky+ years ago) they implement things well and offer the best service. Monopolies tend not to do this, they tend to have the entire market, no competiton and do spend money on r+d as there is no need.

It would be good if the cable companies where forced to expand their network to give people the choice and drive down costs imo.

 

[FrankJH]

Nothing forces you to use windows, some people use other OS's with much success.

You tried getting Oblivion to work on Tiger for example? 90% of all games - possibly all applications only work/available on Windows

As the majority of this site are game players, I think thats an obvious restriction

Its a catch 22 - most developers know that the OS of choice for majority of its customers is a varient of Windows, they then gear towards that huge customer base and ignore the few remaining percent ( as is practical for them)

I personally dont trust Sky, they market an HD channel with lots of US programs available in HD ( as thats how most are filmed) and yet half the content are upscaled SD at best

THe one thing I like Sky for is the popularity of the PVR, I think Sky + definitely was what the market in general wanted as a technology

 

[Radiation]

Well have to give sky some credit for their new broadband service and hopefully it shakes things up a bit with their low low prices but then who knows what it will be like or what could happen in 12 months time.

 

[Werewolf]

They are not a monopoy, its a free market and anyone can compete with them.

Ntl/Telewest are far more evil in their business practise - they only operate where thay can make money. If anyone needs to be regualted its the cable companies.
.

It costs Sky absolutely no more to deal with a customer 100 miles from the nearest town than one in the middle of london, whilst it costs NTL and Telewest tens of thousands of pounds for every mile of their coverage (Sky just have to rent transponder time on the satalite, once they've done that it doesn't cost them much more than admin time* if they have 2 customers or 20 million).

It's worth noting that apparently Sky as a company don't actually own much of any physical assets - almost everything is rented including "their" satalites, uplinks and studios, about all they have are the rights to various things (rights that tend to only last a few years at a time) and some administrative offices.
Their turnover/profit is good at the moment but their position is anything but secure.

NTL/Telewest on the otherhand don't have the rights, but own a hell of a lot of very expensive equipment and an extremely expensive high quality cable network (and as such their assets are much more tangible and long lasting).


With regards to Sky's BB, i remember reading about their purchase at the time it happened, and apparently the ISP they bought out was one of the worst performing ISP's around with a massive "turnover" of customers and a fairly poor network/setup (basically Sky saw NTL/TW teaming up with Virgin and realised that the TV/phone/internet thing was going to happen and they needed to be able to offer a competing product).




*and the time it takes for someone to fit a dish - a job that isn't massively hard (i've done it without any special tools and zero training).