Sky considers withdrawal of Now TV from YouView

Sky could withdraw its Now TV streaming service from BT and TalkTalk’s television subscribers in a row over costs and the slow development of the YouView set-top-box technology they use.

It is understood that Sky executives have become increasingly frustrated with the £250,000 annual bill it faces to make Now TV available to more than one million households with a YouView set-top box from either BT or TalkTalk.

Industry sources said the irritation had been compounded by YouView’s failure to implement new technology that would allow Sky to provide its full range of on-demand and live streaming services to Now TV customers. Currently it can only offer an on-demand service.

Sky is now considering removing Now TV from YouView when its contract is up for renewal in August, it is understood.

Such a move, which has not been settled upon, would limit access to Sky Movies and entertainment box-sets, such as Game of Thrones, for YouView customers. Sky does have other wholesale arrangements in place with BT and TalkTalk for its entertainment broadcast channels, however.

The YouView consortium also includes the BBC and ITV among others and has been beset with development problems since its inception.

Its set-top box technology is seen as several steps behind the competition as a result, and when BT and TalkTalk agreed a new £100m, five-year, funding deal earlier this year both were keen for development to accelerate.

A new chief technology officer was appointed by YouView in September, but sources said the consortium has still not committed to an improvement schedule.

A Sky spokesman said: “We are committed to giving YouView customers the full Now TV experience and have been working with YouView management to achieve this.”

A spokesman for YouView insisted its partnership with Sky was “ongoing and both parties are committed to the relationship”.

Industry sources suggested Sky might also consider withdrawing Now TV and its premium content from YouView as part of its ongoing battle with BT.

The pair have failed to agree a reciprocal wholesale deal for their sports channels and are increasingly competing for other forms of popular programming.

BT is also increasingly focused on YouView and is converting hundreds of thousands of customers from its two older broadband-based television systems. Sky could seek to weaken the content available to customers by withdrawing Now TV, industry sources claimed.

Sky insiders denied any link between suggestions it could pull Now TV from YouView and competition with BT. They pointed to its stated strategy of distributing the streaming service as widely as possible.

Polo Tang, an analyst at UBS, said there was little evidence Now TV is having an impact on Sky’s core satellite subscription business.

He said: “Our sense is that Sky has not been that aggressive to date in pushing Now TV but this could change.

“Interestingly 88pc of Now TV subscribers did not think about subscribing to Sky, implying Now TV is additive rather than cannibalistic.”