BT’s sports channels have been live and broadcasting for more than a week but there’s still no deal to bring them to Virgin Media customers.
With this weekend marking the start of the Premier League, expectations and rumours of a deal are as fervent as ever but hard, verifiable information is impossible to come by.
If a deal is reached we’d expect the channels to be available either as a standalone add-on or part of a wider sports pack, not bundled free in Virgin Media’s XL TV package as ESPN was.
But what if a deal isn’t reached?
A lot of Virgin Media customers would be pretty peeved and many are likely to follow through on threats to change TV and/or broadband suppliers.
But the implications for Virgin aren’t just confined to losing a few thousand existing customers, the long-term absence of BT Sport would make the platform less attractive to future potential customers.
Virgin Media would simply cease to be of interest to high-spending, die-hard sports fans who want access to every televised game and event.
This is also potentially true of BT’s own TV platform which is why it recently (and unsuccessfully) asked Ofcom to force Sky to make Sky Sports 1 and 2 available to its YouView customers.
But there’s an important difference in the two platforms – their openness.
While the short term absence of Sky Sports 1 and 2 dents BT TV’s appeal, the channels are likely to eventually be available on the platform directly from Sky.
The core YouView promise – with which BT and fellow shareholder TalkTalk have to be fully in compliance – is fair, open, non-discriminatory access to all content providers.
Future software updates will allow any provider – not just the shareholder ISPs – to stream live channels to YouView boxes, both on a free and paid-for basis.
Sky is almost certain to want to expand its NOW TV offering on YouView to include live versions of its movie and sports channels, in addition to the current on demand film service. It already offers both on every other platform NOW TV is available on.
A year from now BT should be able to advertise the availability of Sky Sports on the YouView platform, even if it’s not directly selling the channels. Sky already does this with BT’s sport channels which are being sold direct by BT, even to Sky TV customers.
Why does Sky do this? Because it ensures customers don’t think BT TV is the only way to view the channels and so limits the numbers who think about switching.
In contrast, Virgin Media is a closed platform, content can only appear if it strikes a deal with the channel owner – there are no workarounds or exemptions. This has always been good for Virgin Media because it gets to act as the gatekeeper.
Only those companies happy to sell it content at a price Virgin is willing to pay can get access to its almost 4m TV subscribers. Until recently, content owners simply had to do a deal if they wanted to be on more than one major pay-TV platform.
But Virgin Media is now operating in an age where must-see sports content is owned by its two largest TV and broadband rivals and the number of viable, big name pay-TV providers has doubled from two to four.
Content owners have an expanded choice of outlets and there’s less reason for some to do a deal at any price because considerations other than widespread availability come into play.
That’s especially true of BT and its sports channels – why would it accept the £3 per month ESPN reportedly got for its channels being bundled in VM’s XL package and lose the status of being the only free source of its own channels?
All of this means the advantage in negotiations is shifting away from Virgin Media and towards the content owner. Its rivals can hold out for a price which forces Virgin to increase costs to customers, or simply withhold content in order retain exclusivity as Sky does with Sky Atlantic.
The absence of that single channel hasn’t hurt Virgin too much, but a failure to also bag BT Sport would start to fuel a sense that its customers can no longer rely on Virgin to offer the content they want to see.
And the less of the new big draw content Virgin can sign, the weaker its position is when renewing carriage deals for the content it already has. Virgin’s bosses will know all this which is why they’ll eventually agree terms with BT.
But when they do, it’ll be BT which gets more of what it wanted, not Virgin.
And unless the cable firm reverses its decision to exit the content business and build up a war-chest of channels can trade with, this is increasingly going to be the new reality it operates in.