Why Sky’s iPlayer deal is bad news for Netflix

Today’s news – that the BBC’s iPlayer, its market-shaping catch-up service, will now be available on TV to subscribers of Sky – is not without irony, given the steady stream of anti-BBC spin we’ve heard from the pay-TV operator (and its newspaper siblings) over the years. Neutral observers of the two UK media giants are more used to seeing them slug it out, like Waldorf and Stadtler, only without the affection.

But Sky has always been a deeply pragmatic company, and the nominal threats from new OTT providers such as Netflix have caused it to put aside its ideological differences with its old enemy, and ensure that its customers don’t desert their pay-TV service.

It will be interesting to see the impact of this on iPlayer usage. Customers of Virgin Media have been active viewers of iPlayer via their TV for some time now, but the addition of Sky subscribers could even see the iPlayer becoming predominantly a service viewed on TVs rather than PCs.

At the same time, the shows available on iPlayer (and on ITV online –also part of the Sky deal and home to some of the UK’s TV crown jewels such as Coronation Street and Downton Abbey) represent the ‘short head’ of on-demand TV content, the sort of shows users watch in large numbers within 24 hours of transmission. These are not only the most desirable shows, they are free. For a service such as Netflix, based on delivering ‘long tail’ TV content for an additional monthly fee, business just got a little tougher.

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