SkyQ might be aimed at the silver surfers

Sky has decided to take an old school approach with the imminent launch of its premium Sky Q service. Generally Sky has been on the right side of all the big decisions and the timing of those decisions (going digital / HD / Sky Plus etc etc) but this one is quite a big call.

Essentially Sky has gone for lots of local storage & multiple tuners in the home with the ability to play that locally stored content on multiple devices in the house (and out of it where content can be sideloaded).

This appears to be going in the opposite direction to many of the web based services such as Amazon Prime and NetFlix who look to relying on very lite Apps and Dongles to get the content into the home and are more reliant on high speed connectivity into the home with centralized technology. Interestingly it also does not seem Sky have a desire to develop the Now TV proposition into a premium service which might have been expected.

One explanation might be demographics. Sky Q is possibly aimed at those over about 40 who are not digital natives but are generally more affluent. This group have probably never visited a torrent site or heard of CricFree. Now TV on the other hand goes head to head with the pirates and is targeted at a generation who are well aware nothing is exclusive.

If the above is correct how many of this older Sky Q group would want to watch TV on a tablet or phone or record 5 programmes at once ?

With BT launching 4K and the young challengers NetFlix and Amazon hot on their heels Sky appear keen to be seen to be innovating and if past performance is a guide to future performance this should be a success.

Amazon Prime vs NetFlix

Amazon, the giant of online retailing, has over 35% market share of cloud platforms. With a market cap of over $300bn it dwarfs a company such as News Corp at $10bn.

Amazon's share price was about $5 in 1998 and now stands at over $600.

The perception of dominance therefore of media companies in local markets must be taken with a pinch of salt given the expansion of the Amazon Prime entertainment offering. Stories of success and failure in the entertainment industry have often been driven by the ability of distributors to pay very high prices for exclusive content for long enough to destroy the competition and grow a customer base. This is even more extreme if Amazon decide to use its content offering as a marketing tool for the retail offering.

What price to understand the level of ambition for Amazon Prime and the investment that they are prepared to make in it. Free hosting / distribution and customer care are a pretty good start combined with hassle free online payment.

NetFlix, success story that they are, have clearly recognised the threat and started to produce content in house (such as the excellent Beasts of No Nation).

These developments look to be good news for both the producers of compelling content and the massive remaining global content distribution platforms once they have fought it out and either consolidated or been forced out.

Amazon look to be able to lose money on content for longer than NetFlix if Amazon have decided that this is a priority area.