Quote:
Originally posted by scastle
NTL still own all the STBs on their networks (which will need upgrading from time to time).
Sky don't have this problem. I think the bulk of their boxes are owned by the customer, so the customer has to pay to upgrade their box.
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So why didn't ntl go down the route of the Sky model? This would have made sense in retrospect. If the boxes were owned by the customer (competitively priced against Sky's boxes) then this massive investment in the kit would not have been necessary.
Plus ntl was backed by some of the richest people in the world at one point, but the difference is that ntl: didn't deliver, Sky did.
Rupert Murdoch isn't stupid, he will back a long-term investment like anyone else, but if Sky hadn't have worked out he would have cut his losses and run. But it didn't happen, becuase they were sharp. The offered a great package, with what people want to watch, good system (despite it's launch teething trouble on the Sky Digital platform), at a reasonable price, and marketed well. The Sky Digital model is now recognised within the industry as the de facto standard and bechmark by which all other PTV COs are judged.
None of this stuff is rocket science, it's all basic economics and marketing: Consumers aren't stupid, if they think they're getting a better deal somewhere else (even if in the long-run they are not) they will go with it. My concern comes from the fact that the digital PTV market is rapidly approaching its ceiling. Freeview will be de regieur for the future low-end or basic viewer that is un-concerned with movies , sports and the like. So what we are left with, fundamentally, is around 10 million PTV homes, but the cablecos only dominating about 20% of the market combined max.
They are not making enough money with the 20% they can hit, so where will they go from here? As before, they can't offer a better system than Sky right now, that is too much investment. They can market themselves a bit better than they were, but becuase Sky is now a cash rich company, you can be sure they will do it better, more agressively and more often - so it would be best to save the pennies.
But it does seem like a bit of stalemate. As I see it, there are a couple of ways forward:
1. TW & NTL merge? No. Short term solution, leads us back to the same problem. TW & NTL should merge, but jointly under a new owner, possibly Liberty Media.
2. NTL becomes a carraige company only. I haven't thought this through, but just off the top of my head this could work along a similar lines to the local loop unbundling that BT is undergoing. NTL could become a very profitable television and internet carrier, leaving the billing to companies like Sky or MTV or whomever. Perhaps a topic for discussion?