Sky Q for Gen X

New Set-Top Box Is a Hub to a Continuum of Screens

On 18 November, British satellite operator Sky introduced a new premium subscription service and accompanying flagship set-top box that further nudges Sky beyond its role of conventional broadcaster. Sky describes its new Sky Q package as a “next-generation home entertainment system”, and it’s certainly one of the most feature-packed set-top boxes ever released.

The Sky Q Silver box has 12 tuners for receiving many channels at once. It has a two-terabyte hard drive for storing up to 350 hours of video, a Bluetooth-based remote control with a touch-sensitive pad and is 4K-ready, though launch details on content weren’t provided. Sky will also offer mini boxes that can be connected to other televisions throughout the home to wirelessly stream content from the main Sky Q box, meaning that a single Q box can take the role of media mothership by simultaneously supplying different content to televisions across the house.

CCS Insight had predicted that such an in-home media distribution architecture would appear during 2016 with the introduction of HDMI dongles as an alternative to secondary set-top-boxes in 2016. We expect initial roll-out of Q to be targeted at premium, high-value Sky households given the product’s multi-user potential. For example, the box can unicast separate video streams to three big screens and two tablets, allowing users to simultaneously watch live shows while still recording four programmes.

Sky will also offer a tablet app that provides access to live and time-shifted video as well as the ability to download content for offline viewing. The Q Sync feature enables users to doggie-bag content, allowing them to transfer shows and movies from televisions to tablets. Video can move with the viewer from device to device and place to place — a concept Sky describes as “fluid viewing”.

The Q box will allow users to search live and upcoming broadcasts, recorded content and time-shifted video. This universal search feature is a strong improvement but does, surprisingly, lack voice search. Options also include new interactions with social networks, an affirmation of social TV that we believe could help to reduce subscriber churn. Q also affords access to GoPro, Red Bull Sports, Vevo and YouTube content.

The growing popularity of Internet-based streaming services from companies like Amazon and Netflix has had a clear diluting effect on the walled-garden approaches of broadcasters. Sky is wisely treating content from disparate sources with greater neutrality, mirroring the way that consumers treat content. Video is now here to consume in or to take out, or both. Consumer behaviour has changed, and Sky is clearly acknowledging that users — particularly younger ones — regard devices differently. Users now binge or snack on content at the time and place of their choosing.

Sky’s new device could be the most impressive set-top box we’ve seen to date, stuffed with hardware and software features to counter cloud-based approaches to entertainment. However, we wonder if this this will mark the pinnacle before the hardware fall, as set-top boxes get absorbed into the cloud (see Daily Insight: The Changing Set-Top Box Business). CCS Insight believes that the traditional set-top box business is in the process of being disrupted by software options. As fibre-based Internet access spreads and televisions get smart, the box business will become virtual and physical units will be an anachronism.

Sky didn’t introduce any services for the smart home, though powerful and well-connected hardware like Sky’s Q box could be coupled with other connected devices to allow it to act as a central home control point. The service could be linked to wireless sensors to monitor the status of appliances and security in the house. It’s an opportunity for additional revenue streams and service stickiness when Sky lacks other media such as games, which make up a key part of its rivals’ hardware

Sky continues to enjoy the advantage of premium and exclusive content, particularly in sports. This will provide a level of protection but not complete immunity from new viewer expectations for broadcasters. Sky has acknowledged content convergence, which should help its shift to the next leg of broadcast entertainment.

Pricing wasn’t announced, but Sky’s new hardware and service will be available in early 2016.

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