BSkyB: Expect growth in HDTV
This morning (Oct 31st) will see BSkyB unveil its latest results. There has been some market concern that the economic downturn will have affected Sky's numbers, including a worrying report from Continental Research last week that suggested Sky's self-imposed 10m subscriber target (by 2010) would be missed. But there's good advice just out from Screen Digest, especially for Sky's HDTV efforts.
Screen Digest's senior analyst Guy Bisson firmly rebutted the prospects of Sky missing its 10m target, saying: "Screen Digest reiterates its view that BSkyB, reporting its first quarter 2008/9 financial year results this Friday, is a recession-resistant business and recent speculation about a severe downturn in performance has been overstated."
Screen Digest said it expects BSkyB to report improved uptake of its high definition packages when it reports its latest quarter-year results (Q1 of the company's 2009 financial year). "We forecast net additions of at least 50,000 Sky HD subs in Q3, an improvement on 43,000 in Q1 and 33,000 in Q2, the weakest quarters since Sky HD launched in Q2 2006. We expect BSkyB to add another 80,000 HD subs in the last quarter [of the calendar year] to reach an end-2008 total of approximately 630,000 HD subs."
Screen Digest analyst Vincent Letang says: "The reason for the [HDTV] slowdown was, we believe: (1) saturation of the hardcore early adopter customer base as BSkyB approached half a million HD subs, and (2) in late 2007/early 2008 the heavy promotion of the Sky Plus box and significant price cuts attracted some potential HD clients."
"However, Sky has now seemingly started a more aggressive phase two of HD, reducing the price of the HD box to £150 and a launching a massive mainstream ad campaign focusing in HD. Seven new channels were launched in October and the HD box price reduced further to as low as £75. Q3 HD subscriptions have also probably benefited from several HD sports over the summer. Sky HD subscriptions may even have been helped by the launch of Freesat HD in the Spring, which probably stole very few potential Sky HD clients and contributed to raise awareness about HDTV."
Letang added: "In a plateauing pay-TV market threatened by consumer confidence, HD is increasingly seen as driving subscriber take-up (10 to 20% of new HD subs every quarter are brand new BSkyB customers) and ARPU. With a £10 monthly HD fee on top of content fees, there is room, if need be, for discounts and price cuts if acquisitions need to be boosted further."