BSkyB: HDTV is driving more growth


BSkyB is seemingly pressing all the right buttons in terms of product offerings, says a new report from investment bankers Morgan Stanley. And while HDTV is seen as key, the bank has adjusted forecasts for Sky – and significantly upgraded HD forecasts for the company. 3D is also in the pipeline, and Sky might go for a Pay-As-You-Go financial model for 3D.

Morgan Stanley says that the previously-forecast 90,000 net HD additions for this financial year (July 1 2009- June 30 2010) was too low. The bank now expects 1m net adds for the year to June 2010. “Despite being high in the range at 900k going into these figures Sky delivered 32% of our full year forecast number of HD adds in Q1. With significant momentum in sales and Sky presently offering the Sky HD box for free to customers taking Sky HD with Movies we have raised our HD numbers,” says Morgan Stanley.

But new HD subs come at a price. “As ever the impact of increasing the number of HD adds is to draw in extra cost into the current year while enhancing revenues both for 2009/10 and beyond. We assume that 30% of subscribers are new to Sky with the balance being existing subscribers with the weighted SAC being around £240. Each 100k customers has a cost of £24m.The HD only revenue is £102 (or £61pa on a weighted basis with subscriber additions spread through the year). This is equivalent to £5m in 2009/10 (but £10m in 2010/11). The extra 100k net additions in 2009/10 thus costs the Sky P&L £19m in the year.”

“Sky continues to trial 3D and is testing production and shooting some content already for 3D.The company is still looking at the commercial exploitation and appears to favour a pay as you go model. Further announcements on this are likely early in 2010,” adds Morgan Stanley.