THERE’S no doubt something had to be done. BT has lost 10 per cent of its customer base in the last two years, leaving it in desperate need of a new strategy to shake things up for some time.
But you’ve got to wonder what was running through the minds of the execs who got together last year and decided the answer was to poach a former kids TV presenter from the BBC (BT Sport anchor Jake Humphrey) and spend over £1bn on, among other things, Aussie soccer rights. In a way, you’ve got to admire its chutzpah. It has been a while since we’ve had a proper price war (not to mention war of words) between two genuine big hitters, and this is already shaping up to be a good one.
BSkyB was quick to lash out yesterday, calling BT’s multi-million pound gamble a “marketing gimmick”. It’s no wonder the media giant is rattled – its outdated telecoms rival is playing it at its own game. For years Sky has used its domination of TV content rights to run rings around the competition, ploughing its way into the broadband market by bundling up its premium channels and offering broadband for free.
Now BT is doing the reverse – making the most of its network monopoly to offer a couple of sports channels for free (sort of) with its broadband.
But it comes at a price. A big one. BT has shelled out a huge chunk of its warchest on content that no one is really sure it should be bragging about. Serious football fans will not be sated by 38 Premier League games per season, and BT’s claim that the four in five households that currently shun sports packages only do so over price concerns sounds optimistic at most.
On top of that, it has picked a fearsome adversary. Sky’s domination of sports coverage in this country is seriously intimidating, and for true fanatics there’s no price too high to pay for the best.
When others have tried to take it on in the past they have failed – remember ITV Digital and Setanta? No, me neither – they succumbed spectacularly, dragged under after shelling out for football rights that they just couldn’t afford.
BT has certainly come out all guns blazing, throwing cash around to secure the presenters and infrastructure that made yesterday’s launch such a high-profile event.
But it’s today, when subscriptions open, that the hard work starts.
How many viewers will really be lured in by the £8.50-a-month saving that they’ll make by switching from the Sky package to the one being offered by BT?
Investors seem confused.
They already spent yesterday morning selling BT, then the afternoon piling back in as they bought on the dip.
If this high-risk strategy leads to the high rewards, boss Ian Livingston is promising their loyalty will be rewarded.
But at the moment this is looking like a very expensive kamikaze mission.