Dan Marks has resigned as chief executive of broadband video service BT Vision, apparently due to “frustration” over the dominance of Sky pay-television and delays to the proposed Project Canvas joint venture with the BBC and ITV. Adoption of the BT Vision proposition has so far been underwhelming.
When the BT Vision service was announced at the end of 2006, Dan Marks was aiming for up to three million customers in the medium term, an objective that was subsequently revised to at least a couple of million homes by the end of 2011.
With 423,000 customers at the end of March 2009, adding an average of around 5,000 a week, informitv estimated that it would take five years for BT Vision to reach a million at its current rate of growth, not taking into account any churn. The company is currently literally giving away the Vision+ box to its broadband customers, for a one-off installation charge of less than £30.
Meanwhile, Sky added nearly a million subscribers over the same period, from 8.4 million at the end of 2006 to 9.3 million at the end of March 2009.
BT appears to blame Sky for its relatively poor performance and the regulator for not dealing with Sky.
“I’m leaving BT Vision in a good position, but there are clearly some very big issues with pay-TV,” Dan Marks told reporters. “There is frustration across BT that Ofcom has failed to engage the dominance of Sky in live Premiership football.”
In a joint bid with BSkyB, BT secured the on demand rights to a number of Premier League football matches. That allowed it to offer some football on a pay-per-view basis, but nothing more, and indeed far less, than subscribers could already get with Sky.
BT also launched live coverage of some other Premiership matches in conjunction with Setanta, which is itself in grave financial problems after attempting to tackle Sky in the football field.
The strategy of attempting to take Sky on at their own game was brave but probably flawed from the outset. It seems unreasonable to blame the referee for the result when a company meets more than its match in Sky.
BT Vision was never positioned as a serious competitor to pay-television. Its target market was those that were looking for a little more than they could get with free to air television, without being tied to a long-term subscription contract. But BT has confused this message with complex monthly payment packages, with a total cost that is comparable to the lower tiers of pay-television operators.
BT then appeared to confuse its strategy further with proposals for a joint venture with the BBC and ITV to create a new hybrid broadcast and broadband platform, dubbed Project Canvas.
It was unclear where this would leave BT Vision, based on the Microsoft Mediaroom platform, or indeed how it would work in practice.
Following an industry consultation, the BBC Trust was obliged to refer the proposals back to BBC management for more detail after concerns expressed by many industry stakeholders, not just pay-television operators BSkyB and Virgin Media.