Simon’s Blog

Last week, satellite broadcaster Sky pulled the plug on renewing its deal with Virgin Media to provide access to  handful of basic Sky television channels.   If you’re not familiar with the very public spat, then check out this report on the BBC web-site.   What seems to have happened is that Sky was demanding an increase in fees from Virgin Media; and Virgin was not prepared to pay that increase.  So Virgin walked away, and Sky pulled the plug. Sky was clearly prepared to let this deal fail, and lose, for sure, 100% of the revenues that flowed from this deal with Virgin Media.  And Virgin Media was clearly prepared to let this deal fail and potentially lose a bunch of customers who want access to the Sky channels.

So, who’s the loser here?  I think the answer is that Sky has come off worse.  Why? Because the truth is that the channels we’re talking about have very fews pieces of programming that people watch in serious numbers; those shows being 24, Lost and Nip/Tuck.  That’s about it.   Aside from that, from Virgin Media’s perspective the channels probably have close to no value.    That’s a problem for Sky because it’s easier for most people to deal with losing access to such a small number of shows by dowloading them using something like BitTorrent, rather than changing TV provider.

And that’s exactly what people are doing.  Virgin Media customers that are fans of 24, Lost and Nip/Tuck have simply started downloading their favourite TV shows, now that their provider is unable to provide them.    I think Sky miscalculated on this one…