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Sky bids big to maintain movie monopoly

6th Dec 2012
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Home entertainment is a highly competitive business where success ultimately depends on financial prowess. According to recent reports, BSkyB has signed an exclusive deal with the company behind Hollywood giant Universal Studios, maintaining its lead in movie channels as it fends off increasing competition from the likes of Netflix and BT.

Sky once dominated home movie consumption with its array of channels dedicated to screening TV premiers of recent Hollywood blockbusters. But the way audiences consume film is changing. It is no longer enough to offer a wide choice of options. Modern viewers expect to be offered an unlimited choice of movies that they are able to stream on demand. And a provider’s success depends on its ability to positively differentiate itself from the competition.

Sky’s longevity and profitability can be attributed to its unrelenting assertiveness within the market and its ‘speculate to accumulate’ ethos. The TV network’s renewed agreement with NBCUniversal allows Sky’s movie channels to screen films including recent hits Anna Karenina, The Bourne Legacy and Ted, as well as the upcoming Les Miserables. With the deal, Sky has retained its grip on the pay-TV film market. It currently has exclusive deals with Hollywood’s so-called Big Six studios, meaning it can show around 70 of the top 100 grossing movies at least a year before rivals and a few months after they are released on DVD.

There is no doubt that this deal didn’t come cheap, but Sky’s savvy accounting professionals realise that in this fast moving digital age – you need to invest in exclusivity to stay one step ahead of your rivals. Of course, its competitors have their own USPs to sway consumer opinion when deciding on which product to buy. But by holding on to this lucrative agreement, Sky has ensured that its brand offering is unparalleled.

Sky’s position may have angered rivals, especially after the Competition Commission ruled in August that it did not have a monopoly on the market. But when the stakes are high and consumer attention is ever more fragmented, rights will ultimately go to the highest bidder. Sky’s financial team realises that brand heritage alone is not enough to guarantee future success – it works hard to maintain the company’s market position.

Upstarts such as on-demand internet streaming services Netflix and LOVEFiLM have vowed to make things more difficult for Sky by aggressively bidding for movie rights, while BT is buying up football and rugby rights to challenge Sky Sports’ dominance. However, Sky is often able to offer multi-faceted deals that give it the edge over rivals. In a separate agreement with NBCU, Sky has also renewed the rights to broadcast channels such as E! Entertainment Television and Syfy.

If you’ve got what it takes to make it in the movies, why not get in touch with us at [email protected].

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