U.K. pay digital battle heats up

BSkyB aims to counter Virgin service this summer

Pay TV giant BSkyB hit back at Virgin Media's high-profile "quad play" launch Thursday, announcing it would launch its own Sky-branded digital terrestrial pay television service offering movies, sports, entertainment and news (HR 2/9).

On the day that business tycoon Richard Branson unveiled details of Virgin Media's glossy cable, on-demand television, mobile telephony and broadband offer, BSkyB said it would launch its own stand-alone Sky-branded digital terrestrial service this summer.

Topping the Virgin Media service will be a new television offering, Virgin Central, that combines ordinary television channel choice with TV-on-demand technology.

Deals with such distributors as Buena Vista International Television and Alliance Atlantis mean that Virgin Central will be able to offer shows including "CSI," "Grey's Anatomy" and "Alias."

"For the first time, there is a single brand set to provide a more extensive range of television, entertainment, broadband and communication services than previously offered by anyone in the U.K.," Branson said.

Virgin will offer packages at £20 ($39), £30 ($59) and £40 ($79) as well as a "very impressive package" (VIP) at £80 ($157) per month.

BSkyB's digital terrestrial service will offer only a handful of channels, compared with Sky Digital's 200-plus offering or the revamped Virgin Media package. Pricing details have yet to be announced.

But the service will offer a low-cost entry into pay television as well as premium movies, sports and entertainment. It will be the first time that the broadcaster has launched a television product outside the satellite business it began building in 1998.

The satcaster wants to claw back market share from the likes of fast-growing digital platforms like Freeview — which signed 2 million new customers over Christmas — as well as newcomers BT Vision, Tiscali and the new kid on the block, Virgin Media.

Sky will remove its current lineup of channels (Sky Two, Sky Three and Sky News) from Freeview and use the digital terrestrial capacity to launch a four-channel service of Sky One, Sky News, Sky Sports and Sky Movies.

The satcaster has recently seen higher churn rates and slowed subscriber growth as existing customers explore cheaper rival services.