Last week Sky announced a €4 million ($4.5 million) investment in Molotov, a French OTT video service owned by the founder of cinema information site AlloCiné and the former chairman and CEO of premium French TV programmer Canal+.
Molotov offers a "freemium" model, where content from about 35 over-the-air broadcast channels is delivered free, and 37 additional premium channels can be purchased for €9.99 ($11.13). There are announced plans to add more premium services via a contract-free model, but details have not been disclosed.
According to Sky, "This investment is part of a larger Molotov financing round and is the latest in a series of Sky investments in innovative startup companies."
The Molotov investment follows a $45 million investment in Asian streaming service iflix earlier his year. The service was only founded in May 2015, and has just over 1 million subscribers spread across Malaysia, Thailand and the Philippines. The service is set to compete not only with Netflix, but also SingTel's Hooq service and PCCW's Viu in many of its target territories. (See Singtel Uses 4G to Launch Streaming Video Service and PCCW's Lee Discusses OTT Service Viu.)
The Molotov investment is a lot smaller. But Sky is the only announced investor in this round, and $4.5 million isn't such a small stake in a company that has raised $22 million in three rounds. And I think the fact that it is an OTT service in France is noteworthy.
Sky has typically launched streaming services in countries where it already has a pay-TV footprint, such as the UK. And after taking control of Sky Deutschland and Sky Italia in 2014, it has since rolled out streaming services in Germany, Austria and Italy as well. Ireland is likely to be next, as Sky is also present there. However, France has remains an important media market that Sky has not entered till now.
In Asia, Sky parent 21st Century Fox controls satellite service Star TV, but there had not been any attempt to launch streaming services across Asia until this rather more sizeable investment in iflix. (Although Star offers streaming video in India via its "Hotstar" online video service.)
News Corp Australia, also a Murdoch company, controls pay-TV provider Foxtel in Australia, and has launched a streaming service there called Presto to compete with Netflix Inc. (Nasdaq: NFLX) and local provider Quickflix.
For many years, News Corp's owner Rupert Murdoch went about acquiring and building a global satellite TV empire. The jewel in the crown was obtained in 2003, when he was finally able to acquire DirecTV Group Inc. (NYSE: DTV) after being rebuffed previously. This gave News Corp. (NYSE: NWS) a global footprint stretching from Australia to Latin America -- and most importantly, a presence in the US. But just three short years later, News Corp handed DirecTV back to Liberty Media Corp. (NYSE: LMC) (which eventually sold it to current owner AT&T Inc. (NYSE: T)). This was partly to strengthen the Murdoch family's control over News Corp, but also perhaps because its management recognized that OTT was the future.
In fact, it has probably taken longer than Murdoch anticipated. But it could be that the success of Now TV (Sky's OTT service in the UK), and the launch of Netflix in 130 countries earlier this year, has convinced Sky's management to go global with OTT. We have already seen what happens to OTT services that arrive too late in a crowded market. (See Does Watchever's Demise Highlight a Looming Challenge for OTT?)
Could these be the first steps towards building a global streaming empire to rival News Corp's old satellite empire, and Netflix's current one? Or am I just reading way too much into a comparatively small $4.5 million investment in a young French startup?
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation