James R | On 21, Apr 2015

Sky has dismissed the suggestion that it is competing with Netflix, as the company’s VOD offerings continue to grow.

There is a lot of talk about Netflix’s rise causing a decline in traditional viewership in the US, but while HBO has just launched HBO Go to offer cord-cutters a contract-free option, in the UK, Sky has already established its own VOD products.

Sky’s latest report shows that it has connected more than 1 million set top boxes in the year to date, taking its connected base to almost 7 million homes. The boxes, which allow customers to download and catch up with series. has driven Sky On Demand downloads to over 300 million during Q3, up 63 per cent year-on-year. Sky’s TV series, which it likes to package as digital “Box Sets”, delivered a quarterly record of almost 100 million views across both Sky+ and Sky Go (its mobile live streaming service). The Walking Dead, Grey’s Anatomy and Game of Thrones have proven the most popular.

Indeed, the fantasy epic is Sky’s biggest show – it is no coincidence that HBO launched HBO Go alongside it in the US – and saw an overnight audience of over 1.5 million in the UK and Ireland for the first episode of Season 5, up almost 30 per cent on the previous season.

Sky also has a pay-per-view VOD service, called Sky Store, which “regularly ranks number one or two among digital retailers for new releases”. Indeed, Sky says it accounted for over 30 per cent of all UK digital ownership sales for Gone Girl. Last week, Sky extended its shop to multiple devices – laptops, iOS and Android devices, and NOW, Roku and YouView boxes – meaning that anyone in the UK can buy a movie from Sky.

For non-customers, Sky runs NOW, a VOD service that offers its TV channels and movies contract-free for monthly subscriptions. It has seen subscribers grow 30 per cent year-on-year, driven by the success of its NOW box – a branded Roku set top box that includes apps such as iPlayer but excludes those of rival subscription platforms Netflix and Amazon Prime.

Despite this decision, though, Jeremy Darroch, chief executive of Sky’s enlarged European operation, says that one is not necessarily harming the other: “Netflix has been in the UK for a few years now and both [of us] have continued to grow well. It would be wrong to characterise [Sky versus Netflix] as an either/or [choice]. Look at what we are doing in terms of box sets and the on-demand proposition we have built up. It is strong. I can’t see why we won’t continue to grow strongly and others will as well. It is not about dividing up the pie, it is about growing the pie.”

Average revenue per user, notes the Guardian, has remained “almost flat” for the seven quarters (at £47). Andrew Griffith, Sky’s chief financial officer, admits that NOW, which is far cheaper than full-blown Sky, is “slightly dilutive” to that figure. He highlights the growth, though, as most important: the number of new TV customers, either to traditional Sky or NOW, grew by 94,000 in the quarter.

Netflix has also enjoyed strong growth in the past three months, with its global membership passing the 60 million mark, which it attributes to the appeal of its original content.

The pie continues to grow.

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