Sky’s streaming partnership with ViacomCBS should bring out the best in both companies

Seemingly out of nowhere, Comcast-owned Sky this week announced a European collaborative streaming project with ViacomCBS.

The service, dubbed SkyShowtime, will reach more than 20 European territories encompassing 90 million homes. Importantly for Sky, the SVOD will be launched in markets outside the operator’s existing pay TV and OTT footprint. 

Details on pricing and a launch date are few currently, but the service will be available to consumers in Albania, Andorra, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Finland, Hungary, Kosovo, Montenegro, Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain and Sweden.

The streamer will launch with a library of over 10,000 hours of content from the NBCUniversal, Sky and ViacomCBS portfolio of brands, including titles from Showtime, Nickelodeon, Paramount Pictures, Paramount+ Originals, Sky Studios, Universal Pictures, and Peacock.

Sky and ViacomCBS are evidently aspiring to make a splash with their new streaming service and create a competitor to Netflix, Amazon Prime Video, Disney+ and eventually HBO Max in the region. 

In a TV and Video Industry developments impact brief, Omdia principal analyst Sarah Henschel explains the justification for this development.

“Domestically Peacock, Paramount+, Discovery+, Showtime, and HBO Max are all individual services,” she writes. “WarnerMedia and Discovery have announced a merger indicating it is quite likely for those two streaming services to combine in 2022. 

“Comcast and ViacomCBS have chosen to partner their services jointly in the European market because SVOD count per HH is lower than the US across Europe and content licensing strategies vary. By combining three US streaming services under one umbrella and under the successful Sky brand Comcast and ViacomCBS are setting their international streamer up for the most success.”

Sky’s varying approaches

From a strategic perspective, the launch of SkyShowtime should serve as the perfect complement for the existing business. 

Sky’s subscriber numbers dipped across Europe by 248,000 in Q2, but it still has over 23.2 million subscribers in the UK, Italy, and DACH (where it has recently launched an internet-only version of its Sky Q service).

But while Sky’s pay TV business has attained a level of stability thanks to its market-leading status in its markets, there is little opportunity for traditional pay TV operators to greatly expand in the modern day. 

Sky is increasingly leaning on aggregation in markets where it operates its pay TV service

For Sky to expand into markets like the Netherlands with a comparable satellite TV service to its offerings elsewhere would be time-consuming, costly and ultimately would likely result in little reward due to overall depression in the pay TV market. That poor performance led Sky to pull out of Spain last year, where the Sky España service was shut down after failing to gain a significant share in a hotly contested streaming market.

This is why the company is increasingly shifting its strategy to be a super aggregator, an approach that has in recent weeks seen the company announced plans to launch Peacock and ViacomCBS’s Paramount+ in Europe via Sky Q.

With this in mind, for Sky to expand into new markets, OTT is the most logical of approaches. 

The largest costs involved with such endeavour would be marketing and technical support in order to ensure that servers can handle the demand of potentially 90 million homes. The content and platform side of things will already be accounted for. As mentioned, SkyShowtime’s content will be made up of content owned by either Sky, its parent company or partner broadcaster ViacomCBS, while Sky’s experience with Sky Go and Now makes it well-equipped to launch a new platform. This much was evident from NBCUniversal’s launch of Peacock, where NBCU admitted to utilising the tech of their sister company across the pond.

Ultimately, launching an SVOD – especially one with as broad a content offering as SkyShowtime – presents a low-risk way of potentially creating a genuine competitor to the major streaming services operating in Europe and generating a whole new revenue stream for Sky. 

A merger on the horizon?

The other major element going on with the prospect of SkyShowtime is the repeated reports of a potential merger between Comcast and ViacomCBS. 

As early as June, Comcast had reportedly been eyeing a merger with one of ViacomCBS or Roku. Talks between Comcast and the former gained pace last month, with execs from the pair specifically discussing the prospect of a global streaming alliance.

Talks eventually would cool following reports that the Biden administration will move to aggressively enforce antitrust laws, but the desire to collaborate and potentially merge in the long-term is still there.

The 50-50 joint-venture will significantly benefit ViacomCBS’s streaming efforts as it considers its continued expansion of Paramount+ internationally. This was evidently not the plan when ViacomCBS launched Paramount+ in the Nordics earlier this year, with the service being rolled into SkyShowtime when it launches. 

Still, the synergies presented by a partnership with Sky are evidently too good to pass up and are worth the minor embarrassment of shelving a brand less than a year after it was first introduced into the market. 

SkyShowtime will complement ViacomCBS’s Paramount+ in its international strategy, replacing the streamer in the Nordics

All of the signs from ViacomCBS itself ring true with this reading. Announcing the SkyShowtime launch, Raffaele Annecchino, president and CEO of ViacomCBS Networks International, said that “SkyShowtime represents a huge opportunity to accelerate our market expansion and build a leadership position in SVOD in Europe,” and that “we are well positioned to utilise our global content engine to create a compelling streaming offering, quickly and at scale, with a smart strategic phased investment.”

There is no exact science to streaming supremacy. Netflix has thrived by launching its very own distinct service internationally, and while the content varies from market to market the user experience is broadly the same in the US as it is in South Africa.

Disney, as the other dominant streaming player out of the US, has taken a different approach. While it has launched the Disney+ brand in the global north – enhanced in some markets by more adult-oriented content from its Star hub – in other territories like Southeast Asia it has rolled out an altered Disney+ Hotstar service. The approach is evidently working for Disney, with Omdia predicting that Disney will surpass Netflix for subscribers in the region by the end of the year.

But despite being one of the most established US broadcasters with decades of iconic TV content, ViacomCBS (or Viacom and CBS as separate entities for a number of years) has failed to hit the heights of newer upstarts. The company will hope to rectify this by partnering with Sky, while also continuing to grow Paramount+.

Meanwhile for Sky, becoming one of Europe’s largest streaming operators will ensure that it has longevity and profitability as the pay TV market inevitably continues to shrink.