Speaking on the CEO panel at the CTAM Europe EuroSummit in Barcelona, Sullivan said that Sky had embraced OTT as a distribution mechanism, which had attracted its offering to a younger audience. “That said, I have a very hard time understanding the economics of standalone OTT services. There are 62 in Germany…and most of them are running at eight-digit losses,” he said.
Sullivan added there is “absolutely no price elasticity whatsoever” in OTT and rising costs could not be compensated by higher consumer prices, and added that “we’re fooling ourselves if we think there is enough bandwidth capacity” to support unlimited OTT.
Sullivan continued that the supposed reluctance of Germans to pay for TV is a myth. He said that people were less inclined than others to take impulsive purchase decisions but were willing to pay, and in many cases pay more than other European consumers, for TV services. Sky Deutschland has improved its performance by improving execution, he said – pointing out that the German market was more stable economically than other European markets, which had given the operator security.
Sullivan said the German market was highly competitive, with well funded public broadcasters and two commercial broadcasters that had sustained the free to air model better than peers in other countries.
Referring to the Bundesliga, Sullivan said Sky hoped for “rationality” in the market. He said there were a limited number of people who were willing to pay for football and there is a limit to the costs that pay TV broadcasters can sustain. “The sports market never works rationally and I’m sure there will be competition,” he said.