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25/10/2005

Triple play: why BSkyB could beat the field in the UK

Following on from the round-up of Murdoch acquisitions ("What you're watching is Murdoch's strategy evolving in real time") I'll go out on a limb with a prediction, if only to provoke a little debate here.

For all the gloom on BSkyB's numbers and its "defensive" acquisition of Easynet, I think that Sky could beat all-comers (namely BT and NTL/Telewest) in the coming battle for market leadership in triple-play, as the combined offering of TV, phone and Internet is known in the trade.

Sky takes a few knocks from commentators, especially casual ones - concerns I've heard include:

  • Sky's ageing installed base of set-top boxes that still need to pay for themselves - what will they do to meet HD and IPTV challenges?
  • Freeview's growing popularity stealing potential subscribers from Sky.
  • BT's imminent entry into TV over broadband on the one side and a strong, combined NTL and Telewest on the other.

There's simple one reason why I would listen to Merrill Lynch's "buy" recommendation for BskyB stock, if I were investing. Unlike any of its immediate telecom sector competitors, Sky knows how to own and manage customer relationships.

Ever dealt with Sky customer service? Ever dealt with BT or NTL? Experience and feedback from others leads me to believe that Sky has customer service spot on, while BT can be patchy and NTL is sometimes wanting, to say the least.

That means that no matter how they have restructure, adapt their technology or re-launch their services, Sky will be able to retain, grow and cross-sell to its customer base more effectively than the others. And in the coming customer-centric, service-based world, that's what will win.

Not the technology - the service.

There'll be more analysis to come on this titanic corporate struggle in the coming weeks and months, but here's a round-up of some of the other writing on the subject recently:

  • The Register's take on the end of the BT / BSkyB joint marketing agreement.
  • The Birmingham Post, one of the UK's last great regional business papers, has one of the best analyses of the the coming battle I've seen in the pres yet.
  • Digital Spy's forum discussing Teather and Greenwood analyst Conor O'Shea's prediction (Oct 21) of weaker subscriber numbers for its most recent quarter.
  • The Daily Express (no direct link to story available) today carried a story saying that Dresdner analyst Hannes Wittig thinks that BT should bid for the rights to show Premiership football as a way of warding off the damage to its earnings that Sky's move into broadband threatens.

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