After its deep-pocketed swoops on top-flight sports rights, the next major move for BT could be into film and entertainment – with its TV director casting an admiring eye at the impact of Netflix's political drama House of Cards.
Rival BSkyB's model is built – beyond sports – on exclusive deals with the "big six" Hollywood studios for blockbuster films, securing top US dramas such as Game of Thrones and Mad Men, and spending £600m a year into making its own TV shows such as Fleming, a biopic of the Bond author.
Industry observers suggest that BT may well look to follow Sky into film and entertainment next, adding another pillar of must-watch programming to its offering. Alex Green, BT's director of TV, is certainly aware of the potential value of drama and entertainment for its pay-TV service.
"We are definitely exploring further opportunities in how to continue to differentiate and broaden our entertainment proposition," he said. "We are exploring all sorts of things. Netflix has shown the power of a well-marketed TV property. House of Cards can do wonders for a TV platform."
Sky, meanwhile, is keenly aware of the threat it faces, opting to renew its deal with HBO – home of big budget dramas including The Sopranos and The Wire – nearly two years before the current five-year deal expires.
Sky's deals with the major Hollywood studios – Disney, Warner Bros, Paramount, 20th Century Fox, Sony Pictures and Universal Studios – come up for renewal in 2017 and 2018. But if a nervy Sky is hoping for another early strike to thwart a potential BT swoop, a rights battle could break out as soon as next year.
Analysts at IHS put the total value of Sky's movie deals at between £300m and £350m a year. BT has never struck a deal to allow its customers to watch Sky Atlantic, which screens HBO programming, despite it now being three years since the channel launched. Green said: "There is nothing to be said [at this stage] on original drama, original content – it is too early."
Nevertheless BT has in the past admitted that, to compete, it needs to go beyond sport and add a strong entertainment offering.
In its submission to the Competition Commission's 2011 investigation into Sky's control of Hollywood film deals, BT said: "Premium movie channels and/or subscription services that encompass first-run Hollywood movies are, along with sports, the most effective driver of pay-TV subscriptions. Without access to such channels/services, a pay-TV operator's ability to compete in retail pay-TV markets is severely limited."
Green said BT still believes Sky has a "stranglehold" on Hollywood movie rights. But he said the arrival of players such as Netflix has shown that winning in this market is about more than the film rights to the "first pay-TV window" – a deal covering an exclusive period after a film is shown in cinemas.
"We think the market is moving, and companies like Netflix and others are driving changes in behaviour," he said. "Sky has a stranglehold, but our sole objective isn't to break that stranglehold. This is a broader space: it is opening up for movies and TV shows."
