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Sky abandoning the satellite dish - market contestability

Jonny Clark

25th January 2018

Sky have announced that they are abandoning the use of satellite dishes and will move across to a system where all content is streamed through the internet. The switch will occur in the UK at some point in 2019.

The switch is illustrative of the increased competition that Sky faces in the broadcast market and how they are attempting to reduce costs and attract new customers and keep existing ones.

Some people are unable to receive Sky signals through a dish - either their location, building or local regulations prevent the installation.  In recent years, Sky have seen increasing competition from streaming services such as Netflix and Amazon as well as witnessing the technical progress of the Freeview platform which is available through most modern TV sets.

Sky have recognised this competition before and their Now TV system offers a relatively cheap, contract-free streaming service that has proved popular and does not require a dish.

The changes to Sky's provision offers some interesting examples of a market that is becoming ever more contestable.  In the past, few companies could have afforded the sunk cost of entering a market that required mass installation of hardware.  Now, those dishes are shown to be unnecessary.

Also, the broadcast market is becoming ever more regulated so that Sky's premium services (such as their Sports or Movie channels) have been forcibly been made available through competitor services such as Virgin Media and BT.

Likewise, other providers have vastly improved their original content with Netflix now a major player when providing award-winning programmes such as The Crown.  Sky themselves have recently started to broadcast the series 'Britannica' as an example of their own original prowess.

As consumers demand an ever-more flexible access to content and move away from programming delivered at stated times the market will attract more providers - especially those who are able to take advantage of existing or relatively cheap ways of streaming content.

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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