Ad negatives to Sky Plus launch

Despite the predictable hullabaloo preceding their launch, the arrival of two more entertainment channels this autumn is likely to elicit – at best – muted enthusiasm from television advertisers.

After all, there are so many of them already, aren’t there? And in any case, despite their distinguished pedigree – premium media brands don’t come more blue-chip than Walt Disney and ITV – both are likely to experience teething problems. ITV3 has yet to iron out its platform details; while ABC1, which launches on Freeview only, has taken the novel approach of eschewing advertising for the first few months after its launch, though it has explicitly promised to become ‘the most advertiser-friendly environment in the country’.

In fact, it’s a fair guess that the most interesting commercial initiative this autumn will arise from a very different kind of launch, with very different consequences for advertisers: that of the Sky Plus upgrade, Sky Plus160.

Like many a false Messiah, personal video recorders had been much touted, but had failed to deliver, and looked destined to join the honourable company of cable television and the minidisc. BSkyB has changed that perception in the UK, by signing up nearly 400,000 Sky Plus homes in a relatively short period.

Sky Plus160 has several functional advantages over its predecessor, which has led BSkyB to make optimistic assessments about future sales. The principal improvement is at least double the amount of memory on the PVR hard-drive, which will make storage much more practical. Added to that, it will eventually enable Sky to offer near video-on-demand capability. This at a time when Sky must be losing out on one of its revenue staples – films – to the burgeoning online DVD companies, which are cutting a better deal, and on newer film catalogues.

The bigger picture, however, is a world in which BSkyB comes within sight of its sales target of 2.5 million homes with proprietary Sky PVRs by 2010. This would then represent about a quarter of its direct-to-home subscribers. Whatever the actual growth curve (short of a disastrous flop), Sky is likely to become the major driver of PVR sales in the years to come, and will encourage others into the market.

As Carat Insight chief Sue Elms suggests, this would not be the best of news for spot advertisers. The ability to fast-forward ads is likely to be a popular feature of PVRs among future owners, and will lead to a reduction in commercial supply. Worse, the profile of typical PVR viewers is relatively upmarket, so some of the most attractive consumers will disappear first, although this profile will erode over time as the market broadens and prices come down.

Perhaps, on reflection, ITV3 and ABC1 are arriving just in time, whatever their short-term teething problems.

Stuart Smith, Editor

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