Is Streaming the Limit for Sky?

As its content providers start online services, the broadcaster pivots to create its own shows

- Thomas Pfeiffer

On a nondescript road on the northern outskirts of London, a TV and film factory the size of 17 soccer fields is under construction. But while the 14 soundproof hangars and sprawling post- production facilities of the Elstree studio complex are being tailor-made to let U.K. broadcaster Sky create worlds of make-believe, the massive facility has a mission that’s all too real: keeping Europe’s biggest pay-TV company relevant in the face of Netflix Inc.’s global barrage of binge-able content.

Netflix doubled U.K. investment to $1 billion in 2020 and expects even more this year, when Sky (a unit of Comcast Corp. since 2018) will boost spending on original TV and film content by 50%, feeding an arms race for talent and production space. Netflix has practically taken over another major English facility, the historic Shepperton Studios, where owner Pinewood Group Ltd. plans to add 22 soundstages in the biggest-ever expansion of stage space in the U.K. Sky is fighting back by hiking annual spending on original content to £1 billion ($1.4 billion) by mid-decade—double the level in 2018—with half of its output to be made in-house rather than commissioned from third parties.

It’s a response to the stagnation of Europe’s pay-TV industry, and a realization that Sky’s traditional supply of hit U.S. shows is coming under threat as giant media companies cut out distribution partners and take content directly to viewers via their own streaming platforms.