With just under 10.5 million satellite television subscribers in the United Kingdom and Ireland, Sky now has nearly 3.4 million broadband connected high-definition set-top boxes. That number increased by over 2 million over the year and by 642,000 in the last quarter, making Sky the fastest-growing connected television service in the United Kingdom. The challenge from BT and TalkTalk so far appears to have had relatively little impact on Sky, although profits have declined slightly due to the increased cost of football rights.
“The number of connected Sky+HD boxes grew by almost 50,000 a week, faster than in any previous quarter, and we are seeing an immediate increase in usage as customers get connected,” reported the chief executive, Jeremy Darroch. “Weekly downloads through our On Demand service grew fourfold in the quarter while the number of movie rentals through Sky Store doubled on last year.”
Sky says the average number of weekly on demand downloads is now 6.5 million, which remains relatively modest in television terms, but in line with other platforms. For comparison, the BBC iPlayer sees around 7 million requests a week through television platform operators, out of around 40 million a week for television programmes across all devices.
The number of paid for movies is more impressive, at 2.1 million a week across 3.4 million homes.
Revenues for the three months to the end of September 2013 were up 7% to £1,843 million, but operating profit was down 8%, reflecting increased costs for Premier League football rights and investments to accelerate the take-up of connected services.
While Sky found 37,000 new television customers in the quarter, the number taking high definition increased by 107,000. There are now 3.2 million unique users of the Sky Go multiscreen service, with 385,000 paying an additional £5 a month for the Sky Go Extra service and the ability to download programmes as well as stream them, an increase of 219,000 in the quarter.
Sky is also continuing to take broadband customers from BT, with 111,000 new broadband subscribers in the last quarter, up by 914,000 over the year to just over 5 million.
Sky is hitting back at online subscription movie services and telcos offering free bundled boxes with its Now TV service. This is available through a branded Roku box that can be bought for £15 online and now in retail stores. These broadband connected customers are included in its total number of television subscribers.
Customer churn increased slightly by 0.1% over the year to 11%, but hardly suggests a mass migration to other services. Although its total number of television subscribers is flattening off in a saturated market, Sky is making more money from them, with 36% now also taking telephone and broadband services from the company, contributing to an average customer spend of just under £560 per year.
Sky faces a further challenge in the Republic of Ireland, where Eircom is offering a new eVision service over broadband, for €10 a month for the basic package, with a free set-top box. There are around 450,000 customers who could receive the service, with the number expected to increase to over a million by 2015.