With considerable relief I got through an entire meeting today without anyone mentioning Brexit, although the England football team’s dire performance in the Euros didn’t get off quite so lightly. The event was the launch of Now TV’s new Combo package, which combines the firm’s familiar streamed and on-demand OTT TV packages with broadband access and fixed line phone calls.

Now TV Combo customers will receive the new Now TV smart box, which includes a DTT tuner and, like previous Now TV boxes, was designed in cooperation with Roku. This partnership seems to be getting closer, as the words “Roku powered” now appear on the TV guide page, the first time this has happened.

The entry level Combo package is priced at £9.99 a month plus £17.99 line rental, and includes the Entertainment monthly pass, “Brilliant” broadband (up to 17Mbps) and pay-as-you-use phone calls. This represents a £5 discount on the standard prices of £6.99 and £8.00 respectively and similar discounts apply across all options. A customer choosing all entertainment packages, including premium sports and movies, and the highest broadband speed would pay nearly £72/month, but at this level they would surely prefer to choose a standard Sky package unless satellite service was unavailable. Now TV remains targeted at those who prefer to dip in and out of pay TV without long-term contract commitments.

The new Now TV offers are targeted at two segments:

1. Freeview households. More than a third of UK homes currently have Freeview (DTT) as their only television service. Even if only a small share of these homes install a £40 NowTV smart box to get access to additional pay services on an occasional basis, that will represent an incremental revenue stream to Sky. If they also choose to add or switch to Now TV broadband this would be a more stable revenue stream (since the broadband part of the contract is 12-month minimum).
2. Broadband customers of BT, TalkTalk and other providers. Through Now TV Combo, Sky now has an foothold in the entry level TV/broadband multiplay market. For example, TalkTalk’s “Essentials TV” package is based on the YouView box and priced at £10/month although discounted to £5/month currently, but Now TV Combo with Entertainment Pass has additional premium entertainment channels.

The smart box should help Sky penetrate even further into UK households who have resisted pay TV until now and may even help expand broadband uptake into the last 10% or so of homes. Sky now has a full range of multiplay offers from the lowest to the highest price points, but premium content remains the cornerstone of Sky’s strategy.

David Mercer