You can watch Sky TV…. slide into obscurity

Is Sky TV unable or unwilling to rise to the challenges before it?

As everyone in the real world is abundantly aware, television and the way we consume it, is changing. There is an enormous shift to online and those that fail to embrace it will be destined to the history books.

This week, Sky announced a 12.7 percent increase in net profit of $92.5 million in the six months to December 31. Revenue from subscribers was up 3% with overall revenue up 1.8%.

But that’s about where the good news ends. The NBR’s Chris Keall has astutely described Sky’s revenue as “golden handcuffs”.

8,707 subscribers ditched the pay tv service resulting in a household penetration dip from 48.7% of the population to 48.3%. Churn rose from 13.2% to 13.7%.

While admitting that the industry is in transition to online, Sky CEO John Fellet seems entirely naive about how to do so. Having helmed the company through many years as a dominant monopolistic force, Fellet seems ill-equiped to steer the company through the obstacle course created by disruptive technologies.

While Spark have been through the pain of losing market dominance and share and have learnt to adapt to their new environment, Sky have not. In a game of evolve, or die, Sky, it’s current form, simply doesn’t have the skills, resources, or nous to successfully make that transition. Their track record doesn’t suggest so, at least.

While Igloo is viewed as a complete disaster as a product, it served a purpose for Sky and it’s desire to prevent regulation.

Neon is quite possibly the worst attempt in the world to replicate Netflix and completely deserving of the nickname shitflix.

Last year, Fellet was adamant that “people prefer to watch sport live” and therefore it didn’t need to be offered via a streaming service. He then appeared to have a “come to Jesus moment” and changed his mind with the recent announcement that Sky would, in fact, be offering an overpriced streaming sports service.

I have stated many times that I don’t believe Fellet understands the changes that are happening, and more importantly, how to react and deal with them. In fact, his typical response is to laugh it off.

When commenting on the $US7.99 monthly subscription price and describing it as crazy, Fellet joked about whether what was being asked of him was if they [Netflix] could stay crazy longer than he [Sky] could stay solvent.

Fellet mistakenly ignores the fact that Netflix has increased it’s subscriber base to more than 57m now and with annual revenues of more than $US4b, they are in fact profitable. Sky, on the other hand, is bleeding subscribers to digital services at a rate that is only going to speed up, with no suitable plan or strategy for survival other than to maintain the status quo for as long as they possibly can.

If your only solution to increase revenue and provide a guarantee for the future is to squeeze more out of existing subscribers, you have a real problem on your hands when the number of subscribers you have is in decline and that decline rate is speeding up. It’ll be a race to the bottom when existing subscribers realise that their increasing costs are there to subsidise those who have wisely chosen to abandon their overpriced service in favour of cheaper, and arguably better alternatives.

That approach may have worked in the past but there is no way that is going to work moving forward. Just like Teresa Gattung at Telecom did, John Fellet has reached his best before date at Sky and it’s only a matter of time before either he, or the board, figure this out.

Will the sword be swung or fallen on? Either way, Fellet’s days are numbered.

An increasing ?number of people are avoiding Sky TV’s outrageous charges. ?For decades they have fleeced their customer base by essentially lying to them. ?First there were no ads, then there were ads. ?Then they started re-bundling content so you had to pay more to get what you had before. ?And then they kept?increasing the monthly fees, sometimes multiple times a year, while giving you more content, but taking the premium content you are interested in and hiding it behind yet another chargeable fee. ?To add insult to injury, they even charge you for SkyWatch, the magazine that tells you what’s on every day.

And then they sort-of-launch (eventually) a streamed via the Internet?option?and it isn’t even in HD quality, yet they charge more than everyone else doing the same.

Not sure what business school the Sky TV people attended, but it appears they are trying to bleed the cash cow dry without any thought to its long term survival.

As the Internet provides more high data and high speed plans for rates that are only $10 more than Sky TV’s base+movie+sport fees, people are starting to wake up to the many opportunities to stream the content they are after and cutting Sky TV out. ?This is happening right now with the Cricket World Cup, Super 14 and All Black games.

This is the marketplace that Sky TV faces, and it is still in a mindset where you’re allowed to have all sport in one package, but if you want the Rugby Channel, it’s more. ?And if you want to watch boxing matches, that’s more again.

This is a slow motion train wreck, but Sky TV appear to be blind to it.

Affordable Sky TV - the full package.

Affordable Sky TV – the full package. ?At least you get the magazine free once you get everything else.


– Regan Cunliffe, Throng