Sky worried by content parasite platforms

Sky's chief executive Jeremy Darroch has outlined his fears over the increased numbers of people providing platforms to watch television, believing that many of the online, mobile and other device makers are not interested in making their own content.

With the argument with Ofcom still rumbling on, Sky obviously has a vested interest in protecting premium content, but Darroch – talking in Cannes – believes that major problems lie ahead.

With many different companies getting involved in offering IPTV and device platforms, as well as online catch up platforms, Darroch is keen that companies be as interested in paying to create content as taking advantage of cheap programmes to push their own agendas.

Commoditisation

"A second, very real risk to the long-term value of content... is the threat of commoditisation, and it is all too easy to see how this can happen," said Darroch

"The arrival of new players in the value chain will create a greater number and variety of routes to reach consumers. But the choice of which partner, or partners, to work with must be weighed with great care.

"While all content aggregators are engaged superficially in the same activity, it would be wrong to assume that there is a uniformity of strategic interest.

"For some, content is far from the core of their business; it is the means to an end rather than an end in itself.

"As a consequence, we will see a variety of players – device manufacturers, phone companies or online aggregators – who are happy to retail content at the lowest possible cost, or even give it away, in order to earn their profits elsewhere.

"That might be through the sale of hardware, broadband connections or the delivery of targeted advertising."

Creative risk

Darroch points out that there is an inherent risk in creating content, and that taking the onus away from investment will impact on the quality.

"But here's the problem: creating quality content costs money and is inherently risky. If you strip the value out of content to take a fatter margin elsewhere, you risk undermining the long-term future of quality content altogether.

"That may not be an issue for the device manufacturer, the phone company or the online aggregator. But it's a big problem if you want to go on earning a return from content investment. Or, for that matter, if you want to go on watching the very best TV.

"So all of us with an involvement in content creation will need to think carefully about the alignment of long-term interests when we consider our approach to distribution in the future."

Of course, people will always be interested in paying to see their football team, something Sky knows well, but with investment in quality drama already becoming a key problem in the UK, it is an interesting stance.