What being customer-led feels like

There’s a way to do it better - find it.

Thomas Edison

Sky: Believe in better

There was a popular joke during the early years of Sky TV:

What’s the difference between Sky and the Loch Ness Monster?

Some people have seen the Loch Ness Monster.

Looking back, it’s easy to imagine that the UK satellite broadcaster BSkyB, launched by Rupert Murdoch in 1988, was always destined to rule the world, yet, during its first few years, Sky had mounting losses of £14 million a week and anaemic subscriber numbers.

Murdoch always presumed that three pillars of content - sports, movies and news - would pull in crowds of subscribers with news being the big winner. But in the early years, it just wasn’t happening. With so much free television on offer, BSkyB needed a ‘killer application’ for pay TV; it turned out that the only application the British would kill for was football.

‘They’ve got four big sports in the US, but here it’s football first, second and third. Everything else is so far down the track it’s not funny,’ said David Hill, head of sports at British Sky Broadcasting who had arrived from Nine Network in Australia to launch Sky Sports.1

And while ITV held the rights to top division football between 1988 and 1992, from ’92 re-branded The Premier League, Sky Sports had to make do with cast-offs from lower levels of the game.

However, the tide turned in May 1992, thanks to an audacious £304 million deal that secured Sky live rights to five seasons of Premier League football while handing highlights to the BBC. It was a defining moment for Sky and a huge leap of faith for Murdoch and Sky’s senior management.

Vic Wakeling joined Sky as head of football in 1991, and the following year, he was part of the management team, along with Rupert Murdoch and Sam Chisholm, that masterminded the deal that decisively turned the company’s fortunes around and ensured its lasting success.

Andy Melvin, Sky Sports’ deputy managing director joined the broadcaster as executive producer of football in 1991 and remembered the determination involved:

When the Premier League came along, Murdoch took all the chips, put them on black, and said, ‘Right, spin the wheel.’ It was a huge gamble, and the sceptics said, This will be **** TV, real lowbrow stuff.’ But we were a team of football people, making programmes for football people, and we were determined to make it work.2

The deal was struck on 18 May 1992, at the Royal Lancaster Hotel in Bayswater, London. Everyone expected ITV to win. Greg Dyke, head of ITV Sport at the time, was determined to keep Sky at bay saying, ‘The Premier League would be the biggest dish-driver of the lot.’

But in a shock move, Sky stunned Dyke and the ITV companies by putting together a joint bid with the BBC. Dyke, furious, threatened legal action over the way the negotiations were conducted, calling the BBC ‘Murdoch’s poodle.’ Alan Sugar, the chairman of Amstrad (which made Sky’s dishes), was heard on the phone to Sky barking, ‘Blow them out of the water,’ after ITV offered £262 million for the rights.3

BSkyB did indeed blow its rivals out of the water, and the deal, for better or worse, reshaped the entire structure of the sport in Britain. It was also a moment that made every broadcaster sit up and take notice of the former upstart. Here was a company that was not to be underestimated. Here was a company that had a way of doing things that was different from its rivals.

The next day, one newspaper (a rival to Murdoch’s own papers) summed it up with the headline, ‘Future sold for pie in the sky.’ With contracts signed, Sky splurged on a glossy advertising campaign to get armchair football fans signed up in time for the new season. With some of the best games no longer available on terrestrial TV, some expressed their wider concerns about exclusive deals, including Sebastian Coe, the newly elected Conservative MP, who said, T think it is wrong that only two million [satellite] dish owners get access to such major sporting events.’

In what became a long series of firsts for Sky, the first live English football Premier League goal seen by UK TV audiences was scored by Teddy Sheringham for Nottingham Forest against Liverpool on August 6, 1992. Showing 60 live games a year, Sky went on to revolutionise UK sports broadcasting with the money and resources it invested in its Premier League approach. For example, from the start of its Premier League coverage, Sky’s outside broadcast units were running 16 cameras to the BBC’s five. Today Sky deploys at least 24 cameras, most fitted with Ultra HD lenses, and many games have ‘spidercams’ offering a 360° perspective from any position on the field of play.

But it wasn’t simply about financial clout being put behind an understanding of the customer in the form of a bid; Sky Sports’ success has also been about customer-led innovation, about continually thinking about how to improve a sports fan’s viewing experience.

Before Sky’s deal, terrestrial sports broadcasting had been based around highlights drawn from many sources. To put it in perspective, on April 13, 1991, the last Saturday before the launch of Sky Sports, Bob Wilson had opened the BBC’s Grandstand programme with a basketball championship in Birmingham.

Sky understood what a large number of people especially wanted to watch - that the real mileage and excitement lay in live events and especially football. Moreover, the broadcaster’s technical innovation gave Sky customers the kind of viewing experience previously restricted to the players themselves.

For example, in 1992, the ‘steadicam,’ a stabilising bodysuit that allows camera operators to rush up and down the touchline without making viewers feel sick, was introduced. (This is now used in big budget movies like Harry Potter.)

More recently, Sky introduced the idea of adapting the ultra-slow-motion cameras used for crash-testing vehicles to enhance sports coverage.4 All these broadcasting innovations have been subsequently adopted by other sports broadcasters and have become the norm, improving the experience for millions of distant sports fans all over the globe.

Financially, BSkyB was also turning the corner by 1992, moving into operating profit for the first time in March that year. By August, Sky dishes were in 3.3 million homes, and it had 1.6 million subscribers to its sport and movie channels.

Once BSkyB had bought the rights to Premier League football, it used them to build the strongest pay TV distribution system in the country. In September 1992, a handful of weeks after it started showing its exclusive live Premier League coverage, it started charging subscribers for the privilege.

As BSkyB’s successful bid for the Premier League appeared to set it on the road to success, the naysayers sat up and started taking notice. Sky’s customer base grew and grew. By 1996, Sky Sports had 3 million satellite subscribers and BSkyB controlled 90% of the revenues generated by pay TV in the UK.5

Sky’s dogged belief that TV viewers would value better telly so much that they were prepared to pay for it paid off. This shared belief, part of a wider ‘outside-in belief system,’ helped the entire organisation have the confidence to make decision after decision that created customer value in new and better ways.

Nearly 30 years from launch, the broadcaster has grown from a bold upstart into an innovative, multi-platform technology and entertainment company with 22.9 million subscribers around the world.6

Sky’s story, like Walkers and Tesco, is an example of a customer-led organisation challenging convention and taking big audacious steps in its quest to improve its customers’ experiences. Vic Wakeling, by now the head of sport at BSkyB, confirmed its focus on customer choice in 1994:

Sky Television is all about choice. It’s about people who want to tune in and watch the news whenever they get in during the day or night.

It’s about people who want to watch a selection of movies ...7

In this chapter, we’ll be looking at how Sky’s outside-in beliefs lay behind the entertainment company’s successive stages of success. Through the story of Sky, alongside others, we’ll be examining why shared beliefs matter so much, and then in relation to our customer-led questions, how they vary between inside-out and outside-in belief systems. We’ll see why the former is more common than the latter and what outside-in beliefs actually feel like within a company in order to better understand how to create and hold onto them.

 
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