Superbrands case studies: Sky

Originally published in 'Consumer Superbrands Volume IV', May 2001. The book reviews the UK's strongest consumer brands as judged by the independent Superbrands Council.

Case study provided by the Superbrands organisation.

Market

Over the last decade the media market has been transformed by new technology. First it was the arrival of satellite television services, then the internet and now digital television. During this revolution, a handful of analogue television channels have been replaced by a new multichannel television world where a vast content is providing the British viewer with an unprecedented amount of choice. It is amazing to think that around 10 years ago we could choose between only four terrestrial television channels.

All this has made the media market increasingly complex and fragmented, allowing content owners to target ever smaller niche audiences and creating red-hot competition amongst media owners and content owners.

As the company that started the non-terrestrial television revolution in 1989, Sky is in a unique position to be at the forefront of these sweeping changes. In the race to be master of the digital television world, the stakes are high. To date, of the UK's 21m households that have televisions, 20% also have digital television, a figure which is projected to reach 53% by 2003 and 75% by 2008 (Source: The Henley Centre). By 2010, the Government hopes all UK homes will have digital television so that it can switch off the analogue television signal for good.

Every broadcaster is working hard to reconfigure its services into a multichannel offering, as well as developing new services to harness the opportunities for interactive viewing, e-commerce, video on demand and television via the internet. Furthermore, services will be available across a wide variety of platforms, ranging from digital satellite to cable and broadband phone lines such as ADSL. As such, the number of competitors in the market is getting larger and larger, including not only the likes of the BBC and ITV, but also NTL, Telewest, Kingston Communications and BT.

Achievements

Sky will always be remembered as the brand that began the UK's television revolution. It introduced the concept of choice to UK viewers, doubling the number of channels on offer when it launched its satellite broadcasting service in 1989.

Over a decade later, Sky is a media phenomenon. Almost one in three UK households subscribes to Sky channels, attracted by a compelling range of content. Sky One attracts higher ratings than any other non-terrestrial general entertainment channel. Sky News wins plaudits for the breadth and depth of its coverage -- its reputation peaking during the Kosovo crisis -- and its movie channels show an unrivalled diversity of motion pictures.

One of Sky's greatest achievements has been in its sports coverage, especially football. Its astute acquisition of FA Premier League live soccer coverage was a masterstroke, injecting unprecedented revenues into the English game. In the process, Sky has not only transformed television soccer coverage, but also helped to make the Premier League a star-studded stage for some of the world's best footballers.

More recently, Sky has overseen one of the world's most successful launches of a new digital television service. The 1998 launch was the UK's first digital television platform, offering over 200 channels. It was the fastest digital television launch in Europe, attracting 2.6 million customers in its first fourteen months. The technical excellence of its new digital platform was recognised by the Royal Television Society in 1999, when it awarded Sky digital the Judges' Award for Technical Innovation. It was also awarded a Computerworld Smithsonian Laureate Medal for its pioneering role in the launch of digital and interactive television.

History

Rupert Murdoch launched Sky Television's Direct-To-Home service in the UK in 1989. Broadcasting via the Astra satellite, Sky initially comprised a four-channel network. The early days were not easy as a market used to only four terrestrial television channels was slow to wake up to the virtues of the new satellite service. As the new venture reported losses of £2 million per week in its first year, many observers said it had little chance of success.

However, it made steady progress, signing up one million UK homes by 1990 and launching Sky Movies, the UK's first encrypted channel. A rival satellite operation -- British Satellite Broadcasting -- had launched, but then merged with Sky to form British Sky Broadcasting. The nine channels of the two new partners were streamlined in 1991 into a five channel network comprising: Sky Movies, The Movie Channel, Sky Sports, Sky One and Sky News.

In 1992, BSkyB made a landmark deal, securing exclusive rights to live FA Premier League football coverage. This radically changed the face of football television coverage and also revolutionised the Premier League itself, which benefited from the increased revenue. Movies were the other cornerstone of its offering, the importance of which was reflected in 1994 when Sky announced a £13 million investment in British films.

By 1995 BSkyB boasted a package offering 24 channels including Sky Sports 2, the Disney Channel and the History Channel. This wide-ranging offering helped it notch up over five million subscribers and in 1996 it renewed its deal for exclusive live coverage of Premier League football until the end of the 2000/2001 season.

By this point, BSkyB had helped establish non-terrestrial television as a major force in the UK, with satellite and cable achieving a 10.8% share of the total UK viewing audience, a figure which surpassed BBC2 and Channel 4 for the first time. It continued to innovate with new services, pioneering pay-per-view in the UK with the coverage of Frank Bruno's defence of the World Heavyweight Championship in 1996.

In 1998 Sky entered an important new stage of its development, launching Sky digital. Initially offering 140 channels, the service attracted over 100,000 subscribers in the first 30 days. Using highly innovative new technology -- developed in a £100 million investment -- Sky digital opened the door for interactive television for the first time in the UK.

Today, Sky offers viewers the widest range of general entertainment, movies, sports, documentary, music and specialist channels.

The cornerstone brands of Sky's offering are Sky One, Sky News, Sky Sports, Sky Premier, Sky MovieMax, Sky Cinema and Sky Box Office. The general entertainment channel, Sky One, attracts a huge following with a mix of original programming as well as hit series like 'ER' and 'Friends'. Millions of pounds are invested in original programming via Sky's television production division, Sky Productions.

Sky Digital now has a seven strong line up of sports channels comprising Sky Sports 1, 2, and 3, as well as Sky Sports Extra, Sky Sports.comTV, MUTV and British Eurosport. Together, they cover a host of sports, ranging from Premier League football to golf, cricket and rugby league.

Sky Premier is the entertainment channel showing movies and original programming. It also carries authoritative programmes on the film industry, presented by gurus such as Barry Norman. Sky MovieMax is the home of high-action escapist entertainment featuring stars like Jean Claude Van Damme and Bruce Willis, while Sky Cinema is devoted to cinema classics. Sky Box Office brings customers the very latest movie releases as well as exclusive live concerts and sporting events. Some of the movies carried on these channels are made by Sky itself via its new feature film production division, Sky Pictures.

Sky digital provides an exciting platform for this product line to be radically expanded. It offers 200 channels, catering for every taste. Movie buffs can select from thirteen movie 'screens', sports fans have a choice of seven channels, there are fifteen news and documentary channels, eight for children, as well as eighteen non-subscription channels.

Recent developments

Sky recently underlined its commitment to the UK film industry by launching Sky Pictures -- a feature film production division. Dedicated to commissioning, financing and producing a wide range of movies, Sky Pictures is committed to producing up to twelve feature films per year. Films to emerge from the Sky Pictures stable so far include 'Saving Grace', starring the Oscar-nominated Brenda Blethyn, which scored a lucrative distribution deal at the Sundance Film Festival.

With the launch of Sky Digital, Sky paved the way for the introduction of interactive services. In 1999 it launched two new interactive services, Sky Sports Extra and Open, the interactive channel.

Open allows Sky digital customers to shop, bank, play games and send and receive e-mail via their television sets. This, the first fully-fledged interactive television service in the UK, has been a massive success and is attracting hosts of new users and content providers.

In July 2000, BSkyB reached an agreement to increase its stake in Open to 80% (subject to regulatory approval). Open has become the largest television e-commerce platform in the UK with access to over nine million people in four million homes.

Sky Sports Extra is a new interactive sports channel. It allows digital customers to choose how they want to watch sport, enabling them to choose their own action replays and highlights, camera angles and additional statistics. The technology went live for the first time during a match between Arsenal and Manchester United in August 1999. The service is being improved all the time, providing more camera angles and extending to other sports such as cricket, tennis and international rugby. The opportunities digital technology offers for enhanced television such as this are boundless and Sky has already begun to apply this technology to other parts of its product range, with the launch of Sky News Active, a world first in television news, which puts the viewer in control, giving them a wider choice -- at the touch of a button -- of how and when they view their news and what they can see.

Sky's investment in new media has led to its website, sky.com, becoming a focal point of its activities. The site carries a huge amount of information about Sky's product and services. As broadband connection speeds increase the functionality of the internet, sky.com will become a crucial platform for Sky to bring the benefits of television and the internet closer together.

Promotion

Advertising has always been used to drive the digital television marketplace and Sky's share within it. Campaigns focus on educating the general public about the benefits of digital television. Across a year advertising will feature the general digital benefits as well as key programming highlights and launches of new services.

One of Sky's biggest ad campaigns of recent years was its launch of Sky digital in 1998. Based on the premise of how people should expect more from their television than the limited choice and non-interactivity of analogue television, the campaign positioned Sky digital as a brave new dawn in broadcasting. Old televisions were seen leaping off a cliff as the new world of Sky digital arrived.

More recently Sky launched its animated campaign based on the tagline, 'A digital vision for everyone'. Fronted by a character who takes the viewer through the world of Sky, the ads show the breadth of Sky's activities and showcase the benefits of digital television.

Sport has always been central to Sky's service offering. Each summer sees a major advertising campaign to launch the start of the FA Carling Premiership. From the 'Football is our religion' campaign to the most recent 'Let the power of sport into your life' campaign. Sky has always championed its unparalleled passion for Sport.

Brand Values

Sky has always been an innovator and its brand is infused with embracing technology to break the boundaries of television. It did so with the introduction of satellite television, with the launch of digital and with the introduction of the UK's first interactive services. As such, innovation and challenging convention lie at the heart of its brand.

Recently, Sky has defined its brand as providing 'A digital vision for everyone'. This is based on bringing the extraordinary benefits of digital television to everyone, using Sky's best traditions of invention, creativity and ground-breaking ideas. But most of all, Sky's brand is about entertainment. It wants to inform, entertain and delight its customers using the best that digital entertainment and technology can provide.

Things you didn't know

  • In the financial year 1999-2000 Sky invested £946 million in new programming.

  • sky.com is one of the ten most popular websites in the UK.

  • By the end of 1999, Sky's in-home service was completing approximately 70,000 installations per week.

  • Since its launch, Sky News has produced almost 100,000 hours of programming.

  • In 1999 Sky became one of the UK's top twenty most admired companies.

  • Sky spent £318 million on sport in 1999 -- 40% of its total programming investment. Its investment in movies was £238 million.

  • Since the launch of Sky digital, more than four million digital subscribers have been connected, with a target of five million digital customers by the end of 2000.

    © 2002 Superbrands Ltd

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