Is the Sky Sports model finally showing its age?

IT’S been one hell of a good run. During its quarter century on the air Sky Sports has redefined sports broadcasting, become a cultural touchstone and lightening rod and made for its investors billions of pounds in profits.

As a broadcasting success story Sky Sports has only been matched by Fox News during the time it’s been on the air – ESPN is bigger than both, but has been in existence since the late seventies.

The wider Sky group – thanks in no small part to the sports output – remains hugely profitable, the company’s reported profits were up twelve percent as of July of this year. Given the emergence of BT on the market as a major player in the last couple of years that’s remarkably resilient.

Everything rosy in the garden then? Not exactly. A report a couple of months ago revealed that viewership figures – which are distinct from subscribers, but would have to be entwined to a certain extent – for Premier League games were down nineteen percent at that point of the season.

That’s a remarkable figure and for the executives at Sky Sports a troubling one. It could be – stress on could – be the first evidence that the model which has sustained Sky Sports for as long as it has is in danger of breaking down and not, we suspect, because the Premier League is going out of fashion.

As Sky and BT have bid ever more for the rights to the Premier League the cost of subscriptions have risen in concert and as subscriptions have risen BT’s emergence has meant a single sports package is no longer enough to ensure you can watch all your team’s games.

One week Chelsea’s game could be shown on Sky Sports, the next on BT. The same goes for the Champions Cup in rugby. The need for two sports packages – and the obvious cost of the proposition – pushes a lot of people over the edge of affordability.

All of this has happened at a time when the alternatives to forking over your hard-earned cash to Sky and co have proliferated in scope, scale and quality. That those alternatives are not strictly legal doesn’t seem to a major consideration for a lot of the people using them.

You can easily imagine a situation where somebody has paid for say the Sky package only to find their team’s game is being shown this weekend on BT. Instead of buying a second package they find an alternative means of watching the game.

Once the Rubicon is crossed it’s much easier to go back cross it again and again, opting instead to watch all games by those means and letting the subscription they did have expire.

We say this not to encourage or to condone such behaviour, merely to place it in its proper context. The old model is far from obsolete but it’s rapidly heading that way. The reason sports rights have steadily risen in value is that live sports remain about the only must see TV.

With sports there’s – for the most part – no time-shifting by means of DVR (Sky plus to the lay man), no zipping through adverts and the like and they drive a subscription base like nothing else, not even Game of Thrones of Westworld can compete with live sports for that. As long, that is, as people don’t have a means of circumventing that pay-wall. What the newspaper industry discovered to its great cost, the pay-television industry could be about to discover.

People are reluctant to pay when they don’t have to, although the success of Netflix does seem to contradict this somewhat. Netflix has shown that people are willing to pay for what they want when they want it.

They resent paying for things they have no interest in. Such as a rugby fan – with little or no interest in football – paying a higher subscription because of the latest bumper rights deal with the Premier League. Illegal streaming will inevitably – in our view – force a move towards legal streaming with sports bodies selling directly to the fan, cutting out the middle man broadcaster. Want to watch the Grand Prix? Sign up to Formula One’s streaming service, pay €10 a race, or €150 for a full season.

Watch enough sports and it potentially could add up to something close to what a Sky package currently would cost, but that would be your choice. Any model which relies upon bundling as many sports together as possible and force feeding them to a captive audience is long term a losing proposition.

Choice is the name of the game. In the absence of legal means don’t be surprised when the illegal ones flourish.