From 2018, people who cannot have a dish installed will be able to receive Sky over the internet instead.
The company said the move would help it reach a further six million customers across Europe.
One analyst said the development was a "logical step", but customers would need to live in an area with fast broadband speeds to benefit.
"I don't think Sky is giving up on other things but they see this as an opportunity," said Toby Syfret, TV analyst at the Enders consultancy.
"There are about two million households in the UK, mostly in dense urban areas, where people can't put up dishes.
"If they can offer the full Sky experience without the need for a dish, that is broadening their offer.
"But there will be questions about which homes can get it. Not everybody has the necessary broadband speed."
Sky is also facing competition from new rivals such as BT and TalkTalk, which deliver pay-TV over the internet.
Sky already sells its Now TV streaming service, offering a small selection of television channels and a library of on-demand programmes over the internet.
However, the company told the BBC its new dish-free option was designed to provide a more complete service.
Details of which channels will be carried, and whether the service will support ultra-high definition 4K broadcasts have yet to be decided.
The company is currently in a dispute with broadcaster Discovery, which has threatened to remove its 12 channels from Sky on 1 February.
It claims Sky does not pay a "fair price" for its channels - but Sky says Discovery's threat is about "commercial self-interest".
On Wednesday, the pay-TV giant reported a 9% fall in operating profits after paying more for broadcast rights to Premier League football matches.

The club said revenue fell year-on-year by more than 30% to £31.3m for the six months to the end of December.
Pre-tax profits also fell substantially, from £21.3m to £6.6m.
Celtic were knocked out of the Champions League in August after losing to Slovenian side Maribor. They are currently playing in the UEFA Europa League.
The club also cited lower gains from the sale of players as a reason for the poorer trading performance.
Revenues from multimedia and other commercial activities fell from £19.5m to less than £8m, while merchandising revenues also dropped.
In a statement, chairman Ian Bankier said: "As in previous years, the second half is expected to be more challenging in terms of financial performance with fewer home matches scheduled and no certainty on any further gains on the disposal of player registrations.
"Our strategy remains to live within our means.
"The football environment in Scotland continues to be challenging and we must operate within it in a fashion that does not unduly risk the long term future of this great club.
"Our key focus for the remainder of the year will be to build on the progress we have made in the first half of the season and to deliver silverware from competing in the three domestic competitions and remain competitive in the UEFA Europa League."
Sky is to offer a complete subscription television package without a satellite dish for the first time.
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Celtic have attributed a sharp fall in revenue and profits to their early exit from the UEFA Champions League.