Sky will launch Sky Anywhere later this year, allowing its subscribers to view programmes, well, anywhere. It is not clear whether they really mean anywhere, or just anywhere in the United Kingdom and the Republic of Ireland. Anyway, Anywhere is the equivalent of what the Americans call TV Everywhere, and Sky has been offering it for several years. Complementing Sky Anytime+, its new video-on-demand offering, Sky Anywhere will combine access to the existing Sky Player and Sky Mobile TV services. To support this, Sky is buying The Cloud, giving it access to 5,000 public Wi-Fi hotspots across the country.
Jeremy Darroch, the chief executive of British Sky Broadcasting Group, said that with an explosion of sales of smart phones and tablets there is a great opportunity for Sky, bringing together its existing Sky Player and Sky Mobile services.
“We see an opportunity to reposition those services together by making them available as a simple integrated proposition to add more value for customers,” he said. “We think Sky Anywhere can set a new standard for accessing content and enjoying that away from the main TV set.”
As part of the plan, Sky announced the acquisition of The Cloud Networks, the leading public Wi-Fi operator in the country. This will allow Sky subscribers to access programming at any of 5,000 Wi-Fi locations, and provide Sky Broadband customers with network connectivity out of the home.
The details of the transaction have not been announced, save to say that The Cloud had gross assets of £17.5 million at the end of 2009. The deal was put at significantly less than £50 million.
Andrew Griffith, the chief financial officer of Sky, said: “it’s quite a small acquisition but it’s a very strategically interesting place.” He said one of the big trends they see is in mobile consumption, increasingly over Wi-Fi networks. He described it as “by nature a bolt-on acquisition” allowing the company to offer something additional to its customers. “It’s about positioning ourselves for a trend that we’re seeing in the marketplace today.”
Sky passed the 10 million subscriber mark by the end of 2010, in line with its long-term target. So far, Sky has been shy of setting any further long-range forecasts, looking instead for more broadly based growth in the number of products it can sell.
Sky added a further 200,000 broadband customers in the last quarter, giving it over 3 million broadband homes. Nearly a quarter of its customers now take television, broadband and telephony services from Sky.
Sky now provides a high definition box as standard for new subscribers. The company has just completed a total rewrite of the middleware, the first refresh since the digital platform launched in 1998. A more modular structure will allow the company to increase the pace of innovation.
As an example of this, Sky recently launched Sky Anytime+. Customers with an HD box and a top tier Sky Broadband package can now access around 1,500 hours of content at no extra cost, including a constantly updated library of movies.
The number of homes with Sky+ HD closed the year at just under 3.5 million. Sky says that 70,000 homes have its 3D service, which is just 2% of its HD subscribers. Sky has broadcast over 100 live sports events in 3D to this rather select group of customers.
Around half of all 3D television sets sold so far in the United Kingdom are connected to Sky, which rather begs the question of what the other half are watching. Even so, they only represent around 0.5% of television homes in the country.
Jeremy Darroch said “We are very happy with the progress of 3D to date and are really encouraged by the feedback we are getting from customers.”
Pre-tax profits for the last six months of 2010 were up 26% to £467 million, on revenues up 15% to £3.18 billion.
The strong financial performance from Sky demonstrates the business case for the proposed acquisition by News Corporation for the 60.9% of the company that it does not already own, while perhaps putting pressure on to raise the offer price. In any case, it will depend on whether potential remedies offered by News Corporation will avoid a referral to the Competition Commission.