Media: On-demand changes the plot for Sky Movies

Lewis credits a string of homegrown British innovations. These include “transactional” service Sky Store, an alternative to iTunes where viewers go to buy and rent through the internet-connected set-top box; Sky Go, its version of BBC iPlayer which allows subscribers to catch up on films and shows; and Now TV, Sky’s cut-price streaming service that rivals NetFlix.

In a sign of how fast things are changing, more viewing of Sky Movies is now on-demand, or “non-linear”, than on its 11 traditional “linear” subscription TV channels. Sky Store’s revenues have also jumped 125% in the past quarter against a year ago. Lewis says the company’s new “buy and keep” strategy — offering customers who buy a movie on-demand an additional, free copy on DVD in the post — has boosted sales.

Virtually all the growth at Sky Store has been “incremental”, rather than cannibalising the TV channels.

As Lewis looks back on 25 years of Sky Movies, he reckons the business has made “more improvements and changes in the past two or three years” than in almost a quarter of a century.

Viewers now find it easy to watch on-demand with the TV remote control because more than six million subscribers have upgraded their set-top boxes by making them internet-connected.

For Lewis, this isn’t just about new technology: viewers value Sky Movies because it invests in quality content and “curates” it with care and “a human touch”, rather than relying on computer algorithms.

Sky has recently renewed exclusive deals with five of the “Big Six” Hollywood studios to show their films first on pay-TV, and the sixth, Rupert Murdoch’s 21st Century Fox, Sky’s top shareholder, is all but certain to renew. It means Sky Movies has a library of 1000 largely new movies and Sky Store has an additional 1400.

Lewis says the studios like the fact that Sky Movies showcases their films — like its 007 channel: “We put more value into the Bond franchise in 40 days than ITV took out of it in 40 years.”

“I hear the occasional competitor talking about curation,” he adds, referring to Netflix, which is famed for using algorithms to arrange content, “but I’d question whether anyone curates their service like we do. We’ve got a team that’s very knowledgeable, who really understand film. That human touch is incredibly important.”

Sky’s recent merger with Sky Italia and Sky Deutschland opens the way for greater collaboration — it should give Lewis greater clout in rights negotiations — and there is even the possibility of original film commissions. He has looked at a few scripts but not taken them past the development stage.

He is adamant about one thing: “We’re never going to get to the point where the service is run by algorithms.”