Sky wards off threat from new players, such as OTT video provider Netflix, simultaneously managing to grow its pay-TV subscriber base and ARPU. The UK’s leading pay-TV operator has been successful at increasing ARPU while protecting, and even growing, its traditional pay-TV subscriber base in a tough market, both from an economic (risk of triple-dip recession) and competitive (emergence of new propositions, notably YouView and Netflix during 2012) perspective, thus maintaining its leading position.
Analysys Mason Senior Analyst, Cesar Bachelet, comments following the Interim 2012/2013 British Sky Broadcasting Group plc Earnings Release today:
- Pay-TV subscriber growth doubled from 04{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} to 0.8{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10}, highlighting the resilience of Sky’s core proposition and its continuing appeal – Sky’s net adds were 88,000 between September 2012 and December 2012, compared to 40,000 during the equivalent period in 2011
- Sky’s fixed broadband base grew by 16{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} in the year to December 2012, an impressive figure for a mature market like the UK. However it is slowing – whereas triple-play penetration increased from 28{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} to 29{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} in the 3 month period to December 2011, it remained at 33{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} during the equivalent period in 2012.
- A lot of potential to drive up the adoption of new services within the existing subscriber base in order to enhance the stickiness of the core pay-TV proposition and also develop new opportunities for monetisation, such as Sky Go Extra: rising penetration of Sky Go in particular, increasing from 21{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} to 29{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of pay-TV base year-on-year (between December 2011 and December 2012). Sky+ HD penetration increasing from 40{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} to 43{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} – within the Sky+ HD base, the percentage of subscribers connecting their boxes to broadband increased from 11{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} in December 2011 to 38{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} in December 2012 (in terms of the entire pay-TV base, it increased from 4{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} to 16{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} over the period). Whereas ARPU increased by 1.7{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} between September 2011 and December 2011, it rose by 3.3{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} between September 2012 and December 2012
- NOW TV likely to grow significantly as awareness and adoption of YouView and other connected TVs increases: interesting to note the 25,000 NOW TV subscribers – not a huge number, but a starting point for Sky’s venture into the OTT video space.
