Analystsconsider the recent tie-up between EE and BT Sport as the next punch in an ongoing battlewith Sky, , and others to bringactionable quad-play initiatives to the U.K. market.
EE announced July 11 that it will offerits mobile customers six months of free access to the BT Sport app startingfrom July 27. The deal comes after BT closed its £12.5 billion of EE in January followingregulatory approval from the U.K.'s Competition and Markets Authority.
Accessto the BT Sport app will reportedly enable EE's 15 million subscribers tostream live content from the BT Sport channels. After the six-month period, theoffering will be available as an add-on at a cost of £5 a month.
Forboth companies, the deal provides an opportunity to cross-sell bundled servicesby leveraging their mobile, fixed line, broadband and TV portfolio. It alsosignificantly expands the reach of BT Sport's channels.
"Weare seeing the first fruits of EE leveraging BT's content asset," PaoloPescatore, director of multiplay and media at CCS Insight, said in aninterview.
Describingthe deal as a win-win for both entities, Pescatore noted that the agreementwould promote EE's mobile offering and means the "return of the BT brandon the high street.”
"Thereare plentiful opportunities for subscriber and revenue uplift for bothcompanies given that 14 million households do not buy products from either BTor EE, and a further 10 million households buy a product from only oneentity," Pescatore explained.
Moreover,by offering EE customers access to the BT Sport app pressure on Sky ismounting. The pan-European pay TV giant has a lead in the British pay TV marketand dominates the exclusive sports content space, which gives it leverage as itattempts to make a move into mobile. Sky is namely preparing to enter themobile market this year in a partnership with Telefonica's British mobile unit O2, in a that gives it wholesaleaccess to 4G services over O2's nationwide network. Earlier this year, Sky wasbeing courted byprivate equity firms, including KKR and Bain Capital, to back an O2 buyout.
Hardbattles are fought over exclusive sports content in Britain. Both BT and Skysplashed out acombined £5.14 billion for the English Premier League TV rights.
However,the tie-up between BT Sport andEE may give BT Sport the edge as it potentially stands to grow its audience tomore than 15 million, Pescatore said.
"We expect BT Sport to have more sportsubscribers than Sky Sports by the end of the year. This validates BT's currentstrategy… [and] will give the company confidence to invest further in keypremium sports rights."
TheBT Sport-EE deal was preceded by a raft of similar deals between mobileoperators and content owners, such as an agreement between and -backed Virgin Media, EEand Deezer, andSpotify and Vodafone.
London-based John-Paul O'Sullivan, TV andvideo analyst at S&P Global Market Intelligence, said this "next stageof convergence" highlights the increasing importance of mobileconnectivity within the media landscape as traditional cable operators move intomobile. He said the reverse isalso true of mobile giant Vodafone, which plans to add TV service to its fixedline, mobile and broadband offering later this year.
At the same time, this growinginterdependence between the TV market and the fixed and mobile space is farfrom a new trend in Europe.
As such, British quad-play upstarts will bemaking up for lost time, according to Dario Talmesio, Ovum's practice leaderfor Europe. He described the U.K. as a "latecomer" to the trend, addingthat France and Spain lead theregion in terms of quad-play penetration. Nonetheless, Talmesio said the BTSport-EE deal is a start of more quad-play initiatives to come.
"Itsignals a new direction for the U.K. and is an indication of what we are goingto see in the future," Talmesiosaid.