Analysys Mason says Sky wards off threat from OTT video providers like Netflix

Telecom Lead Europe: Analysys Mason says British Sky Broadcasting Group 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 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.

Jeremy Darroch, CEO of British Sky Broadcasting Grou

Jeremy Darroch, CEO of British Sky Broadcasting Group, said: “We have delivered another good performance in the first half with strong progress across the board. In what remains a tough consumer environment, our broadly-based growth strategy is working well. Good product growth in the quarter means that our total base of subscription products has grown by 10 percent year on year.”

READ revenue growth of British Sky Broadcasting Group HERE

“During the half, we have invested in providing the best service to our customers while continuing to drive greater operational efficiency. We strengthened our content offering, extended our leadership in customer technology and continued to lead the industry in customer service,” Darroch added.

Analysys Mason senior analyst Cesar Bachelet says Sky’s Pay-TV subscriber growth doubled from 04 percent to 0.8 percent, 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 percent 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 percent to 29 percent in the 3 month period to December 2011, it remained at 33 percent 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 monetization, such as Sky Go Extra: rising penetration of Sky Go in particular, increasing from 21 percent to 29 percent of pay-TV base year-on-year (between December 2011 and December 2012).  Sky+ HD penetration increasing from 40 percent to 43 percent – within the Sky+ HD base, the percentage of subscribers connecting their boxes to broadband increased from 11 percent in December 2011 to 38 percent in December 2012 (in terms of the entire pay-TV base, it increased from 4 percent to 16 percent over the period). Whereas ARPU increased by 1.7 percent between September 2011 and December 2011, it rose by 3.3 percent 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.

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