Would Sky or any other “legacy” pay TV provider ever offer all of its video services over the open internet? And I’m not referring to “TV Everywhere” services which are only available to “real” pay TV customers, but pure OTT. There are all kinds of arguments for and against, and the general consensus is that it will be quite some time, if ever, before this is practical if only from a technical perspective.

But Sky seems to be pushing ever closer to offering its own fully fledged OTT pay TV service with its new Now TV pricing. As we noted at Now TV’s launch sports and movies were always going to provide the greatest appeal for Now TV customers. Movies have been in place and are a compelling proposition at £8.99/month for Sky’s entire movie VOD library. Sports have always been more problematic, not least for technical issues as we identified at the service’s first major rollout. Since then Sky has persisted with its expensive £9.99 Day Pass sports option and has likely sold very few of those products.

Until last week, that is, when it launched two new sports options: the Day Pass is reduced to £6.99 and a new 7-day pass is introduced at £10.99. By some measures this could be calculated as an 84% price reduction (previously the cost of watching Sky Sports on Now TV for a week was £69.93, though I suspect there had been zero customers).

I have no doubt this new price point will prove a great deal more compelling, allowing football fans typically to watch three live Premier League games and one from the Championship, as well as a number of games from European leagues.

Sky’s stated aim with Now TV is to target non-pay TV customers who currently use free services from Freeview and Freesat. It claims that 80% of Now TV customers have never previously taken a pay TV package. Our own ConsumerMetrix survey only found a small sample (28)  of NowTV users in Q4 2013 so while the findings should be treated with caution we found that more than half were subscribing to a pay TV service. Nevertheless, Now TV clearly has the confidence to experiment further with price points which put Now TV ever closer to the Sky TV equivalent.

Direct comparisons are impossible: there are only 12 entertainment channels offered in Now TV’s package, compared to more than 35 in the basic Sky package. But in terms of content the movies and sports comparisons are very close. The two major differences are Now TV’s lack of recording (DVR) and HD. Sky’s cheapest package offering basic + movies + sports currently retails at £51.50/m standard. A Now TV customer can now pay £61.60/m for Entertainment, Movies and Sports (based on pro-rated sports 7-day ticket).

Now TV of course offers a great deal more flexibility – no up front contracts and the freedom to dip in and out of different content packages without penalty. Some sports fans may find that they can avoid buying one or two weekly packages a month if they happen not to watch any events that week, in which case the cost will fall below the equivalent Sky TV package.

BSkyB will continue to promote its Sky set-top box service as the premium offer (through superior content choice, DVR, HD, 3D, Sky Go etc) and will be very careful to watch for any sign of defections of its own customers to Now TV. I suspect these will still be very limited in spite of the new Now TV pricing – most Sky customers are happy with their service, if resentful of high prices. And technical issues continue to dog Now TV as evidenced by regular complaints to customer forums – increased demand for live OTT sports streaming will put further pressure on the Now TV systems.

But Now TV has evolved rapidly, as we expected, into a fully fledged pay TV service, even if Sky would prefer to describe it as “Pay TV Lite”. BSkyB’s challenge now is to make sure its main service continue to just the prices demanded by “Sky TV Heavy”.

David Mercer