As Now TV service comes to LG tellies, is Sky in danger of doing itself out of business?

LG’s smart TVs get exclusive access to Sky’s on-demand offshoot – but will that drive customers away from their satellite dishes?
LG TV with Now TV

LG has announced that Sky’s Now TV IPTV service is coming to its range of smart TVs. Starting from August 2013, Internet-connected LG tellies (and some Blu-ray players) will be able to access live Sky Sports and on-demand movies from the service.

LG has an exclusive on this, for TVs at least, for at least 12 months, and anyone buying new LG kit will get three months free access to Now TV’s movie library, plus three 24-hour passes for live Sky Sports.

LG’s gear joins a growing selection of third-party products able to access Sky content with no requirement for a Sky contract. Now TV, which launched almost exactly a year ago, is already available on computers, Android and iOS devices, Xbox 360 and PS3 consoles, YouView boxes from Humax and BT, and Roku streamers. Sky has also made Sky News available on Apple TV via an app.

Is Sky tempting people away from satellite?

Now TV
Now TV on Nexus 4

It all begs the question: is Sky in danger of tempting people away from its more lucrative satellite subscription model and into a pay-as-you-go future? Now TV is a cheap alternative to regular Sky: unlimited movie streaming costs £8.99 a month for the first three months, rising to £15 thereafter (you also get 30 days free at the beginning); a day of access to Sky Sports costs £9.99, which might seem pricy but makes sense if, say, you’re only interested in a particular football team – it’s probably cheaper than going to the pub to see a match, especially if a few people are watching.

Is that a model that’ll take money out of Sky’s pockets? Our hunch is that it isn’t, not in the long run at least. Sky has to adapt as more and more people become “cord-cutters”, moving away from traditional broadcast models and turning to Internet services like BBC iPlayer, Netflix, Lovefilm Instant and yes, Now TV for their televisual entertainment.

Sky Sports without a subscription

Sky Sports Now TV

Now TV’s movie model may be pricier than Netflix and Lovefilm, but it offers access to a far wider selection of blockbuster movies, and gets them earlier than either of its rivals. It’s also the only way to get Sky Sports access without a subscription of some kind, so it’s positioned to carve out its own niche.

It’s also fairly unlikely to cannibalise a large proportion of existing Sky subscribers, because at the moment it’s limited to standard definition resolutions. Anyone who has gotten used to Sky HD and its eye-pleasing level of detail will struggle to ditch that for a return to SD, even if it does save a few quid a month. Existing Sky users also get access to the Sky Go streaming service, available on many of the same devices as Now TV and offering an impressive range of live and on demand content.

Sky is a content producer too

Sky News on Apple TV

And we shouldn’t forget that Sky itself is more than just a satellite broadcaster – it’s a content provider too, and increasingly so. “We always explore wholesale distribution over platforms other than our own,” Sky’s Amy Holland told Stuff recently. “Hence our 18 distribution deals with other UK platforms such as TalkTalk, Virgin Media, EE, Sony and Microsoft.” Sky is also a leading provider for iOS devices, with its apps having been downloaded over 30 million times.

The company’s intention is to broaden the distribution of its content through Now TV, Sky Go and Apple TV. Sky seems to recognise that the future of television lies on the Internet, and it making strong strides to ensure it’s well prepared for that future.