More than 50% of Sky's 10 million customers now subscribe to Sky+ or HD+ coupled with several million more digital TV recorders used by free to air users poses a serious and growing threat to the advertising revenues of all of the broadcast TV channels.

How it Works

The Sky+ box is a digital TV recorder that includes a hard drive which as with similar DTV recorders enables users to record TV programme's by means of scheduling and series linking onto its hard drive thus enabling TV adverts to be skipped through with ease.

Skipping Live Scheduled TV

Adverts switching of live pre-scheduled programs can be done by delaying watching the program a few minutes into its start i.e. it is no longer necessary to dash to watch as soon as the program starts but delaying watching of 5 minutes or so is enough to skip all of the advertising. i.e. program starts 10pm, pre-selected to record, user starts watching at 10.05pm from the beginning enabling skipping of program title and adverts.

Skipping Live TV

Similarly live tv not pre-selected for recording can be paused for a few minutes, enabling of minor tasks such as making a cup of tea or dealing with distractions during the programme which enables all of the advertising to be subsequently skipped.

In my experience Sky+ has resulted both in the viewing of more television whilst at the same time far fewer adverts are viewed and therefore must pose a serious risk to the revenue stream of broadcast channels, even for sky this may end up being a net money loser as advertisers dessert the broadcast channels or offer far less money for advertising space. Similarly the private broadcast channels will be forced to charge subscriptions.

Sky Mini-boom may come to an End Soon!

Whilst at this stage Sky benefits from this mini-boom in the demand for DTR's, however as internet broadband speeds continue to increase so will the far cheaper internet TV channel services present a serious risk to all broadcast channels especially Sky Satellite services.

Broadcast channels such as Channel 4 and ITV are being forced to go down the internet route, especially following the success of the BBC iplayer, however the commercial channels initial offerings have proved totally unreliable, buggy and intrusive to computer users therefore take up has been poor. However recognising the failure of their own independent service, Channel 4 has just announced that it will syndicate its content for FREE on YouTube (owned by Google) which is the worlds number 1 video sharing portal and therefore represents an important first step to deliver content on reliable platforms rather then attempting to reinvent the wheel. The threat is therefore to Sky as the broadcast channels have a potential internet viewership in the hundreds of millions rather than the potential of 5-10 million via Sky. With Channel 4 paving the way, other UK broadcasters such as ITV and Channel 5 will be forced to follow suit or continue to die slow painful deaths.

Source: http://www.marketoracle.co.uk/Article14322.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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