Comcast's bid for Sky could be the foundation of a global Over The Top offering, according to an analysis from MoffettNathanson Research’s Craig Moffett.
Moffett suggests the pairing of proprietary and valuable content from Comcast’s NBCUniversal with Sky’s would serve as an important enabler.
“Sky brings with it a trove of exclusive content and rights that could be the basis of an OTT service with a genuine moat, capable of rivaling Netflix itself,” Moffett said.
He added: “The case for Sky demands that Sky be viewed not as a satellite TV distributor, but instead as a platform-agnostic content provider, one with unique and proprietary access to high-end including the English Premier League, Universal, Disney films and HBO."
That, in theory, would “give Comcast the heft and the programming muscle to create a pan-European, or even global, direct-to-consumer OTT service,” Moffett said, noting that there’s some justification in the thought that a mixing of NBCUniversal’s and Sky’s unique content could create “something truly differentiated.”
At the same time, he points out that OTT is still not very profitable on a dollar margin basis, and that satellite TV, despite its struggles, is far more profitable over the lifetime of a subscriber.
But Moffett also reasons that the structural differences between the US and UK markets could make Sky’s OTT offerings more profitable down the road, offering an assumption that Comcast believes it could create a larger, more scalable service that can transition Sky’s satellite service to OTT.
“A smooth and gradual hand-off from one to the other, where OTT growth is so rapid as to more than offset declines/cannibalisation in the satellite service, would appear to be a rather optimistic scenario,” Moffett explained.
But the access and distribution of valuable and proprietary content holds the key.
“One can assume that Comcast believes that the combination of Sky’s and NBCU’s proprietary content will be enough of a deterrent to ensure that the margins available to an OTT provider don’t simply get competed away.”