BT increased the combined installed base for BT Vision and its YouView offering by 40,000 in the last quarter, which is 10,000 more than Sky. Yet BT television services have reached only 810,000 homes after six years and added fewer homes in the year YouView launched than in either of the preceding two years with BT Vision. So will its attempt to break into the big league by offering its sports channels free to its broadband customers make any significant impact?
The BT Vision installed base refers to the total number of customers with either a BT Vision or a YouView box that are registered and enabled on the BT Vision platform to receive video on demand. BT does not publish separate subscriber numbers or revenues for its television or video services.
The figure of 810,000 is up by 103,000 over the year, which is fewer than in either of the two preceding years and less than all but one of the previous five years, and notably less than the first year of BT Vision, when it added 207,000 homes.
So far, YouView has yet to make much of an impact for BT. The company does not break out its total YouView homes, but at the end of 2012 it had only 60,000 customers with a YouView box. Assuming all its recent additions were YouView boxes, there might be around 100,000 YouView boxes on BT Broadband.
In over six years, BT has managed to convert just 12% of its broadband customers to its television offerings, and less than 7% of the estimated 12 million homes in Britain that have Freeview as their main television service.
BT has 6.7 million broadband customers, an increase of over 400,000 over the year, which represents an unchanged 38% market share.
BT made an annual pre-tax profit of £2.7 billion on revenues of £ 18.2 billion, so it currently has cash to spend on sport and is placing a billion pound bet on sport to attract and retain people to its broadband service.
In August BT will launch two branded sports channels, plus the ESPN operation it has acquired. These will be offered “free” with BT broadband, or otherwise £12 per month or £15 a month in high definition. There will also be an online service and an app for tablets and smart phones.
Relying on sport is a risky strategy, as others have found to their cost. Sky bet its business on football, effectively creating the Premier League, but only survived by merging with a rival to form BSkyB, which now dominates subscription television in the United Kingdom and Ireland.
While football is clearly still important to Sky, which is now paying around £770 million a year for Premier League rights, or about £6.6 million a match, it is only one element of their programming package.
A match between top teams in the Premier League might score around 3 million viewers on Sky Sports 1. The highest audience for Sky Sports 1 for the last week in April was 2 million viewers and the average daily reach was 1.7 million viewers, representing just over 1% of all television viewing.
Others may watch sport in pubs and clubs, where commercial subscriptions account for anything up to £300 million a year in revenue for Sky.
BT hopes to win by offering its selection of 38 Premier League matches, as well as other football, rugby and other sports coverage, for “free” to its broadband customers.
BT Sport will be available through BT Infinity broadband, which is currently on in 1.5 million homes, and via satellite on the Sky platform, which is available in 10.3 million homes. BT Sport will also be available through an online player or an app for tablets or smartphones.
Many of those for whom sport is the main attraction, particularly football fans, are already likely to subscribe to Sky, which still has the rights to the majority of the Premier League matches.
Far from being a “game changer” as BT would like to believe, it is difficult to see how the BT Sports offering will make much of an impression. Success will clearly be measured by the number of customers that BT manages to attract to its television offering in the future and we will have to wait for the result.