You’d think that anything free opens doors and presents opportunities? Not really. As BSkyB had shown, more and more people are opting to pay £99 for a Sky Plus box or £49 and monthly fees for its Sky+ HD service. Indeed, more and more subscribers are eschewing standard Sky programming and subscribing to its HD or PVR service.
BSkyB introduced its HD service on May 22, 2006, and with a tumultuous start owing to the broadcasters' problems regarding its set top boxes and the set top box supplier, Sky was forced to turn away more than 17,000 previously signed up subscribers on the launch date itself. Two years later, Sky HD was rebranded to Sky+ HD.
Even with the higher costs associated with the service; Sky+ HD has been enjoying increased sign-ups ever since, culminating in a million subscribers as of March 31 this year.
On the other hand, Sky Plus, the broadcaster's personal video recorder service for Sky Digital, saw 1.3 million new customers within 2008 alone.
The thing is, both of these services are eroding the subscriber base for Sky's standard viewing fare. And why not? For just £30 one-time set up fee and £99 cost for the box needed, Sky+ enables viewers to record a whole series, record two programmes simultaneously, and even use a mobile phone to record programmes while away from home.
More than being the "biggest improvement in TV picture quality," HD also paved the way for enjoying cinema quality picture and sound at home. Sky+ HD also brought more HD content: sports, movies and entertainment, and even 3D content. Indeed, Sky+ HD boasts of over 7,000 hours of HD content each month. And that increases over time as more HD channels are launched.
Admittedly, all these would go to waste if it came with a stiff price tag. Launched right smack in the beginnings of the subprime mortgage crisis and into the current recession, take up for the Sky+ HD service would have stopped cold in its tracks had it not been for Sky's cost-effective packages, which culminated in the current £49 offer for a Sky+HD box launched in January 2009.
The low price and the increased content propelled Sky+ HD to be Sky's single fastest-growing segment, contributing forcefully to a 9% year-on-year increase in Sky's retail subscription revenue to £3.06 billion for the March 2009 quarter.
An interesting trend to watch is how Sky keeps on coming up with offers that further close the gap between its standard package and Sky+ HD, like the current offer that trumpets free standard set-up and gives you a month’s HD pack for free, thereby allowing you to save £150 off the regular price.
There will always be demand for the standard Sky package, where you get the equipment free and no monthly fees (for Freesat only subscriptions). But still, it does not make sense to save up when one is obviously missing out on the convenience provided by Sky Plus or the content that comes with Sky+ HD.