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Blurred Lines: Why U.K. Free-to-air Broadcasters are Dipping into Pay-TV Waters

Blurred Lines: Why U.K. Free-to-air Broadcasters are Dipping into Pay-TV Waters

The media 'big bang' caused by the colliding worlds of TV and the Internet is still in full-swing. With everyone from Netflix, to Microsoft and the BBC producing original, premium-quality programming for Web-TV services, content is still king—but consumer allegiance and effective monetisation is key to unlocking the full revenue potential of this influx of IPTV entertainment.

Content is proving to be the primary point of capture in the battle for the consumer—something that's tempting one major U.K. broadcaster to move into pay-TV territory in a bid to become 'the most watched, most loved and most talked-about family of free and pay channels.' 

ITV—the U.K., free-to-air broadcaster responsible for hit series Downton Abbey—has announced the upcoming launch of its new pay-channel, ‘ITV Encore,’ offering original drama (and access to some of ITV’s most successful drama series to-date) to subscribers of satellite, pay-TV giant Sky.

The move is not ITV’s first foray into pay-TV, but it represents its first major return to the scene since the collapse of 'ITV Digital' around a decade ago. It also builds on an existing partnership with Sky established in 2010 which saw ITV first dip its toes into pay-TV waters when it put HD versions of its channels behind Sky's subscription wall.

So why the return to pay-TV? The past year brought notable change in how media organisations make money from video. Triggered in part by the rapid growth of OTT services, viewers today are comfortable with a variety of pay models to match the different ways they're viewing content—from subscriptions and rentals, to pay-per-view models. It's a development that hasn't escaped the notice of traditional, free-to-air broadcasters looking to diversify the ways they monetise their content and reduce their dependency on advertising-based revenues.

By the same token, consumer appetite for original programming shows no signs of abating and the opportunity to showcase new content via already-popular subscription services is a highly attractive one. The exclusive partnership with Sky is part of a deal that encompasses Sky’s NOW TV and will see the launch of ITV catch-up and archive VOD on Sky Go—making ITV’s programming more widely available on multiple devices, both at home and on-the-go.

Naturally, it’s a mutually beneficial partnership. Deals such as this are an example of how pay-TV heavyweights like Sky can widen their appeal by growing their content offerings through tapping into the popularity of well-known, popular TV brands and series. Partnerships that offer new, exclusive content are undoubtedly a bonus as consumer allegiance builds around the influx of original programming from subscription-based alternatives to traditional pay-TV.

What’s more, the blurring of lines between pay-TV and free-to-air works both ways. Both Sky and BT have made some of their premium sporting content available to non-subscribers, for example, while BBC Worldwide has announced plans for three new pay-TV channels to showcase and monetise BBC content internationally.

Viewers are embracing a blend of OTT services on a host of devices—with a breadth of monetisation models to match. It's a crowded marketplace! And as paid content models mature alongside changing consumption habits, the evolution away from a linear broadcast world is one in which original programming—and agile monetisation—are paramount in capturing the consumer.