Sky and the HBO content coup

Today came news that BSkyB (owner of pay-TV platform Sky TV in the UK) had signed a whopping content deal with HBO - the hugely successful cable TV operator and producer.

The deal will give Sky access to HBO's first class library of productions - including The Wire, The Sopranos, True Blood and Martin Scorsese's eagerly-awaited crime drama Boardwalk Empire. It is believed to be worth around £150m over five years.

I think this illustrates a couple of interesting developments at Sky.

Clearly as Sky have recently been forced to relinquish their monopoly on Sky Sports channels, by allowing BT Vision to carry live Premiership games for example, Sky are looking to diversify their consumer offer. Whilst Sky claim that only 5% of their viewing is football related, it doesn't take a genius to understand that a far higher proportion of their subscriber revenue is directly football related. If this revenue comes under any kind of threat (not sure how much impact the BT deal will have in the short term), then clearly Sky must find other reasons to encourage subscribers to choose Sky, stay with Sky and ideally become a high value customer through taking Sky + and HD options too - which seems to be going very well right now.

So there is diversification going on to shore up subscribers, but also I feel this is part of a confident Sky move to strike for audience growth also as rivals ITV and Channel 4 go through a period of upheaval and re-gearing - with new management teams and profit short-falls.

Sky is reported to have a content development/acquisition pot of 1.7 bn GBP - versus BBC 2 (who originally screened The Wire to great acclaim) having c. 500 mill GBP. It is certain that Channel 4's programming budget will be under increased public scrutiny - indeed this HBO deal really feels like the sort of deal Channel 4 would have been 1st in line for 4-5 years ago. And ITV seem to struggle for consistency in either produced or bought in formats.

That said, Sky also have had their own troubles with self-made programming. Davina McCall's big budget Got to Dance failed to pull in big audiences earlier this year.

It also means that The Wire will soon be on the broadcast sponsorship market - who will be first in the queue? The Baltimore Tourist Authority perhaps?

Social Network monopoly - the death of Bebo

It appears that the 'winner takes all' predictions about the social networking market are becoming truer by the day.


Yesterday the news that AOL would sell or close the social site, Bebo, effectively signaled the end of another once-successful social network which simply cannot compete with Facebook.


A couple of years ago Bebo was the only website that mattered in the playgrounds of the UK and Ireland when it hit the peak of coolness in 2007. Among 13- to 16-year-olds, Bebo was the place to be seen online, where members could blog, email each other, upload videos and design quizzes – while many adults just didn't quite get it.


AOL saw the potential in the site launched from a San Francisco living room by a husband and wife team and gobbled it up for an eye-watering $850m. Which even then analysts saw as a triumph of ego over due-dilgence.


It was the sites positioning and content that orginally set it apart from other sites and drove traffic to a peak of 40 million unique users in early 2008. An example of such content was the online drama serial Kate Modern.



However, it looks like AOL uninvested and misunderstood the brand Bebo. Compared to Facebooks 2,000 engineers; Bebo employed 40 - leading to technical issues which todays social networker has little patience for.

AOL aim to broaden appeal failed also. Moving away from a small but loyal audience was clearly an error. Figures from comScore show the dramatic shift – Bebo's monthly users in the UK fell by 60% from February 2009 to February 2010 to 3.8 million, while Facebook's grew 24% over the same period to 28.1 million.

So the still privately owned Facebook can count the passing of another social rival backed by big-spending corporates. ITV recently sold Friends Reunited for a mere $42m (just 14% of the purchase price). NewsCorps' My Space, a $580mill Murdoch punt, is struggling to re-position and losing share. And now Bebo goes.

Which all goes to show, people want to hang out where there friends are. So is there any hope for a non-monopolistic market in social networking?