Who’ll Come Out On Top: BT Group plc or British Sky Broadcasting Group plc?

It turns out that there’s still some life left to be wrung from your flat-screen TV yet. Same, potentially, goes for those media and telecoms shares.

Unlike myself, who left the TV out in the rain for the rubbish collectors some time ago — don’t people realise what decade we’re living in? — some 98.5% of people watched television on the television in 2013.

There was good reason to scoff at my notion that the future is now. (Don’t go investing in jet-pack stocks any time soon).

A massive industry

Despite the increasing prevalence of tablets and mobile devices, the traditional pay TV model is still big business. The UK television industry generated £12.3bn in 2012 and the largest chunk of this was from subscription revenue.

Traditionally, this has been an area dominated by Sky  (LSE: BSY) (NASDAQOTH: BSYBY.US), but BT (LSE: BT-A) (NYSE: BT.US) has muscled in aggressively, and now has 2.5 million customers using its BT Sport service. The two companies are locked in struggle, fighting over customers who are choosing to get their internet, phone and TV from the same provider.

What it comes down to is the price and quality of the service — brand loyalty doesn’t come into play so much. It’s just some cables that come into your house, after all. For broadband, the most important consideration, after the cost of the service, is the reliability and speed of the connection. For television it’s where you can watch your favourite programmes.

What can I watch?

MessiBT is already clearly offering a compelling package with its sports product which comes free with its broadband subscriptions.

Yesterday, BT’s stock jumped 3% on the court of appeal’s ruling that Sky must offer Sky Sports 1 and 2 at a discount to its rivals. There’s some history here: in 2010 the regulator sought to curb Sky’s dominant position in the market. One of the remedies — subsequently overturned — was a wholesale regulated price for Sky Sports and a guarantee for rivals to have access to the channels.

Again, this is about offering a more compelling and complete service, as BT would like to be able to offer Sky Sports channels on its new YouView set top box. The way is now paved for the two companies to potentially come to a price agreement.

As far as Sky’s offering goes, it can’t afford to get complacent. While Sky is best known for its football product, the company hasSopranos just signed a five-year deal worth £275m for the exclusive rights to the HBO TV catalogue. HBO is best known for TV dramas like The Sopranos and The Wire, and Sky’s move, as part of a wider strategy to build the quality of its non-sport programming, could narrow the angle for BT to enter the entertainment market.

Where should I invest?

While you might like relax with your feet up in front of the television set, with the fireplace on, sipping from a mug of fresh tea, BT and Sky can't afford to get quite so cosy.

I've yet to identify another player in this rivalry, the share price of which reached a 12 year high in 2013, growing by more than 50%. 

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> The Motley Fool has recommended shares in BSkyB.