Wednesday, 24 June 2009

They think its all over.. It is now.

Setanta has finally gone off the air for good in the UK. The Irish broadcaster slipped into administration some £200 million in debt and costing at least 200 jobs. Lots of babble on the Beeb about poor customers still having to pay for a blank screen but as its a monthly subscription service, one of its attractions and weaknesses, it shouldn't be hard to stop the direct debit. Poor punters..out of pocket £12.99 max. Could the business model have worked without the recession?

Setanta needed 2 million subscribers to break even. That was a big ask. Sky, has 9 million and has taken 25 years to build up. Setanta did not do badly with viewers, getting 1.2 million, but there was no room for the unexpected. Like a global recession or the bad publicity from a poor customer service problem. Also Setanta did not appear to offer value for money. A Sky package costs far more but also includes far more. Especially a lot more of much better football matches. Then add in movies and sports and comedy and lifestyle and documentary and music , sci-fi/horror/shopping/quiz and many other channels. Setanta was not bad value for a die hard, rugby, golf and footy fan, but it did lead to football fans feeling they were being asked to pay twice. The competition rules, largely bought in to break up the Sky monopoly were inadequate. Only one of the six sold packages needed to be sold to a second bidder as well. This was the inferior tea time kick off, early start games.

But the real question that should have been asked when the directors sat down to work out their plan to topple Sky was

"Hasn't this been tried before? like ITV digital?"

The Setanta plan was thinking that people would not pay for Championship football but WOULD pay for Premiership football. That was a little bit wishful. Footy fans will pay a huge amount to watch Liverpool vs Man Utd but not a lot for Stoke vs West Brom. Setanta made the classic mistake of over paying for a product.

There are other reasons too. Short term private investment income, when long term investment was required. That same long term investment made very difficult to find when TV rights are sold in 3 year packages. Once Setanta lost two of its three
Premiership rights for 2010-2013 back in February it was all over bar the switch off.


SteveH said...

At least the monkey found alternative work after the ITV Digital adverts. Can the same be said of Des Lynam?

Sidney street said...

I thought that Des and the monkey were one and the same.

Demetrius said...

Before Setanta on Sky there was the PremPlus extra, which you could get for £50 a year up front. When Setanta took over you were looking at a much bigger sub, and Sky reverted back to the basic sub' albeit extra for HD. Also, it is possible that for long time footy fans, some were actually watching less because there is only so much time in life. So Setanta were only really going to get the commercials, like pubs, who had to see that it was worth it for the trade and the keen fans. With so many pubs closing, especially smaller town ones, it wasn't exactly a growing market. As my cousin in Kildare said, the horse was never going to run fast enough to catch the milk float.

Simon Fawthrop said...

Golf was the same problem as footy. They tried to grab the golf market by taking US golf from Sky, but what they obviously didn't realise was that most golf fans only watched US golf out of idle curiosity because it was "free" with their main sports package.

US golf coverage is shite, late at night and focuses on local boys (understandably). All you ever get to see is 6ft putts being made, unless Tiger is playing, then you see all his shots. All the courses look the same and the commentators are devoid of personality and wit. The production is dire and they spend more time on cutaways while the US has adverts or on adverts than they do showing golf.

I know a few golfers who bought Setanta and most were disparaging and looking at scrapping their subscription.

Judy said...

does this mean Ronaldo was ahead of the curve?

Anonymous said...

The UK medias focus is totally wrong. Instead of producing content that can be sold on, everyone seems to be trying to create subscriber revenue.
All the talk is of 'delivery' and 'platforms' and 'subscriber models'; its all horse-shit.
The internet is killing this approach stone dead. Imagine if the transition from radio to television involved broadcasting radio shows with static pictures - how long would TV have lasted?
A completely new approach is needed. More 'Top Gear' less 'When Cats Go Bad' clip shows.
The industry accounts for about 4% of total economic activity. This will contract increasingly rapidly if they dont get their heads out of their asses soon.
Its content, content, content; always was always will be.

CityUnslicker said...

agree with anon. Content is king; but so is pricing. when pricing goes wrong you get ITV digital and Setanta.

Accountsnts and business analysts do have some use after all.

Bill Quango MP said...

The Ad mans dream. 'Flat eric' was more popular than the jeans he was advertising. So was monkey.

Bill Quango MP said...

Demetrius:Agree. Interesting point you make about Sky reverting back to a previous basic sub.
Beware of making a business plan in isolation. If there are competitors they will react to your actions.

Letters From A Tory said...

ITV Digital and Setanta have both been guilty of wild over-optimism in terms of the demand. I have little sympathy with them, although Sky's near-monopoly still bugs the hell out of me.

Bill Quango MP said...

Great Simpleton:
I thought golf was a good idea.Build the brand a little chunk at a time. like BSkyB did. Grab a large audience sector and make it pay only. Sky built their pay for view on Boxing.I didn't realise that the golf was poor quality though.

Bill Quango MP said...

Irina from Dublin
does this mean Ronaldo was ahead of the curve?

Ronaldo is the curve now.
Setanta failing will probably not make a lot of difference to EPL rights.They had lost them already.

Bill Quango MP said...

Anon: there is a whole post there on content. Big brother has been running for ten years. Essentially the same 500 hours of TV each year for 10 years. The BBCs much touted Michael McIntyre is just Live at the Apollo. Even has the same set!
But that's nothing new. 'Allo 'Allo ran for 10 years, with diminishing audience YOY.

Bill Quango MP said...

Nail --- head.
But to be fair to Sky they carved their market position in the teeth of opposition.
If ITV and BBC had not been so smug and so sure that WWF wrestling was not a market they would ever want they could have slowed Sky and allowed other players in.
Back to what Anon was saying though.
It was choice that made people get satellite dishes. From the council estates upwards Sky delivered to its target market the things that they wanted. {subsidising the breakthrough, building the base.
If Sky decide to come for Wimbledon the BBC will be left with the snooker.

Simon Fawthrop said...


Its only US golf that's crap and that's because of they take US production and add their own commentators (or thats what Sky did I haven't seen Setatnta's coverage for a while).

Simon Fawthrop said...

ITV Ditigital was stitched up by the BBC. The BBC insisted on such high interference margins that ITVD had to go out on reduced power in many areas.

I would need to dig out some work I did as a consultant before ITVD closed down, but off the top of my head ITVD lost 30% of their potential market.

That might or might not have saved them, but it was certainly a handicap.

I agree with Anon though, content is king and no amount of coverage will get round poor content.