Sky and Microsoft have announced that Sky’s television channels and on-demand content will be available in the UK this autumn to Xbox 360 owners with a broadband connection. There will be two basic options: 1. Xbox 360 owners who do not already subscribe to Sky will be able to subscribe to a number (yet to be determined) of Sky pay TV channels, and will also be able to download programmes for on-demand viewing. 2. Existing Xbox 360 owners who are also Sky subscribers will have access to on-demand programmes relevant to their subscription package, and may also be able to view live channels through the console, depending on whether they also take Sky’s Multiroom option. One major concern is obviously the speed and data limits associated with the user’s broadband connection. Sky told us they will be pre-testing users’ connections, and recommending a minimum of 2Mbps for live TV streaming. They also indicated that they, and not Microsoft, would take responsibility for any problems with the quality or reliability of the Sky TV service caused by a user’s broadband connection. This strikes me as something of a risk for Sky. Xbox Live has performed extremely well as an online gaming service, supported by Microsoft’s substantial investment in its own content delivery network infrastructure. But the commitment to deliver 24 hour high quality video streaming to large screen TVs puts a new set of demands on these systems. Users will not accept low connection speeds, dropped broadband links or weaknesses in their own wireless home networks as excuses why they are not getting excellent TV picture quality. We also anticipate problems when uninformed users of “Sky-by-Xbox” start to get nasty letters from their broadband service provider about exceeding “acceptable” use policies. No doubt Sky will take these opportunities to bring such customers on board as subscribers to Sky’s own broadband service, but this may not be a successful strategy for achieving early customer satisfaction. For existing Sky customers, the major benefit is that they will, finally, be able to access true (as opposed to virtual, via the hard disk drive) on-demand content from Sky on their TV sets. Sky Player on the PC is all very well, but that’s not where most people want to view movies. Sky is set to take a leap over BT Vision, whose own efforts to launch on Xbox appear to have disappeared into the ether. We are positive about this development as a further indication of the disruptive impact of over-the-top content which are affecting the media, network and device industries. Provided Sky and Microsoft can ensure the service works effectively, it should be a positive move for both companies. We won’t know for sure until it launches later this year. Twitter: twitter.com/DavidMercer_SA Client Reading: Global Digital Media Growth Slows to 2.7% in Q4 2008