UK incumbent telco has launched a download-to-own movie service on its pay-TV platform, BT TV. BT TV customers with a YouView set-top box are now able to access movies on a retail basis via their set-top box. This includes a selection of new release titles from 20th Century Fox Home Entertainment and Sony Pictures Home Entertainment, with more studios to be added. Library movie titles are also available for purchase, with prices starting from £5.99 for standard definition and £8.99 for high-definition. BT TV customers were already able to access films on a rental basis via their set-top box.
Customers are required to have a BT Broadband or Infinity connection and the YouView set-top box. Currently, customers are only able to stream the movies on the set-top box, with plans to introduce a mobile phone and tablet app at a later date. BT also plans to expand its retail catalogue with more movie deals and the ability to purchase TV box sets in the near future.
The ability to download retail movies on the set-top box is a relatively recent trend in the pay-TV market. BT is the first pay TV operator in the UK to offer the option, following launches by operators in international markets such as Free Telecom in France and Comcast in the US.
The move to launch a retail film offer adds another facet to BT’s content strategy. Over the last year, BT has aimed at pushing its broadband offer through the use of premium sports rights, with the retail film offer representing a move to add ancillary revenue generating services to the TV service, and improve stickiness and value perception. Tapping into the nearly £1bn spent by UK consumers on retail film product each year (of which just 6% is via digital/EST services currently) in the UK is an important objective for BT, which is effectively using its TV service as a broadband loss-leader. A soft push to develop the TV offer has been ongoing over the past two years with steady improvements to the TV service – BT launched the YouView set-top box in late 2012 and linear channels in 2013. Prior to the launch of YouView, BT TV relied on DTT Freeview for its linear channel line-up, with its on-demand catalogue acting as a unique selling point and ARPU enhancer. With multicast upgrades, BT is now able to compete with other pay-TV services such as Sky and Virgin Media, offering a pay channel line-up.
BT first attempted to use TV services to push its broadband services, particularly fibre (BT Infinity), in late 2012. However, this strategy was revised when the YouView TV proposition made little impact on BT TV’s customer base, with similar net additions to previous quarters. BT suffered from a complicated TV offer comprising three set-top boxes with differing content and packages, as well as relatively expensive set-up costs. By contrast, the latest iteration of BT TV offers a simpler value proposition to consumers.
Though BT is the first in the UK pay-TV market to offer such a service, rival pay-TV operator BSkyB has also expressed interest in launching a similar retail movie service. Sky announced earlier this week that it is to introduce DTO on its existing rental service, Sky Store, which will allow Sky customers to download and view movies on the set-top box.
The presence of pay TV operators in the retail space could have a significant impact on the size of the still-small digital retail sector. Pay TV operators have traditionally led the VoD sector, with consumers far more likely to rent a film via a set-top box than via an alternative connected device such as a games console or tablet. If operators can persuade consumers to carry forward this propensity to transact into the retail sector, the uplift to growth in revenue for digital retail films could be substantial.
BT’s plans to allow customers to view purchased content on devices other the operator set-top box is critical in driving uptake amongst consumers, particularly when making retail purchases compared to rental. Without transferability, consumers will have little incentive to purchase rather than rent. Customers who churn from BT TV will be sent physical copies of their purchased titles. Ensuring that a consumer entering the digital retail space for the first time isn’t discouraged by restrictions on how they can view their purchased content will be key to ensuring sustained and strong sector growth.