Sky UK will re-brand its Sky Movies channels Sky Cinema, re-launching the portfolio July 8th as part of a major re-vamp that shows the increasing value of non-sport content to the platform. The re-brand will coincide with a major expansion of movies on the service with a new movie premiere now promised every day (up from four a week) and a new World Cinema channel. Sky will also increase the functionality offered to movie customers with a re-start function on linear and free HD for all movie subscribers (sport customers will still need to pay additional fee). An Ultra High Definition (UHD) movie service will launch later this year. The on-demand library will also grow 20% to 1,200 titles and then scale further over time, and picture and sound quality will be boosted. Sky revealed that 55% of all movie channel viewing is now non-linear.
Sky said the move would bring its UK branding in-line with its operations in Germany, Italy, Austria and Switzerland where the film channels already use the Sky Cinema brand, but the move has far greater implications than that. Sky's focus on movies has been fueled both by a desire to centralize and rationalize rights contracts and by the acceptance that movies, drama, comedy and factual programming are increasingly important to the platform's future. Sky recently concluded a five-year pan-regional deal with Sony Pictures, giving it increased content access across all five of its territories and setting a model for contract negotiations with the other majors that will phase in over the next three years. The UK is the most important market for Sky's studio deals with majors, having agreements with all the major studios. Outside Europe, 50% of Sky's movie content comes from independents and it does not have deals with Warner and Universal in Italy or Paramount in Germany.
Clearly centralization and rationalization of rights makes perfect sense for an increasingly pan-regional operator, but the move also lays the groundwork for further international expansion. Sky has made no secret of its desire to use Over The Top (OTT) distribution to take it into new markets and there has been wide speculation that it will enter a new European market soon. Non-sports content is crucial for such expansion having greater universal appeal across countries than national sports. Non-sport content has also ascended in importance, in part because of the Netflix-effect driven by investment in high-quality original drama. Drama is now a significant driver for Sky's growth and has boosted revenues from international programme sales handled by Sky Vision. Sky is also investing heavily in comedy and factual content, two other key genres for movie customers.
Sky is not alone in its ambitions to leverage the rapid international scalability of OTT to move into new markets. Vivendi's recent acquistion of Mediaset's Premium pay TV operations and the increased access it gains to content hint at a similar desire for the French group, with plans to expand with a streaming service initially into Spain and then the rest of Europe. Vivendi is also building a European major studio through co-operation with Mediaset's Medusa and its own Studio Canal. Despite some commentators asserting that there is now a glut of original scripted drama coming out of the US, the appetite for pan-regional expansion among Europe's pay TV majors looks set to ensure that movies, drama and factual remain a key premium battleground.