Pay TV giant British Sky Broadcasting (BSY) rises 4.6% to 918p as the company reports a set of strong key-performance indicators (KPI) for the first quarter, in particular those relating to its connected TV services which it began monetising in January.
The total customer count, at 11.2 million, inched ahead a further 71,000 since the 30 June year end. There's now more than 5 million broadband users.
The real story lies below the surface and relates to the number of households that are now taking more than one core service, or signing up to additional add-on subscription products such as the £5-a-month Sky Go Extra offering launched in January.
Rising content costs – following a bid battle with BT (BT.A) for Premier League rights – may have caused profitability to temporarily stall, but crucially the 7% rise in revenues over the quarter, despite last month’s price increase, tells of a company that retains pricing power, even in the increasingly competitive backdrop following the BT Sport launch this autumn. We have consistently maintained that BT does not pose a credible threat (see Sector Report, Shares, 23 May)
If September’s price increase was partly responsible for the rise in revenues, the fact that Sky is selling more to its existing subscribers is also of vital significance. What is perhaps the most important KPI of all, average revenue per user (ARPU), inched ahead a further £2 since 30 June to £559.
Driving the ARPU figure, up 3% in the past year from September 2012’s £542, were the 800,000 more customers since 30 June which subscribed to a BSkyB product of some kind and now total 32.4 million products. Each of 11.2 million headline customer count now takes an average of 2.9 services.
The larger driver for the rising subs was the increase in ‘triple play’ customers taking all three of the core TV, telephone and broadband services, 1 percentage point higher since 30 June at 36%. But a quarter, or 219,000, of the 800,000 increase in subscription products came from new sign ups to Sky Go Extra whereby customers can add an additional two mobile devices in order to download content via their set-top boxes or directly from the internet.
Sky Go Extra is driving the monetisation of BSkyB’s online offering and customers are increasingly able to access such on-demand services as the number of internet-connected set-top boxes is rising rapidly, up 642,000 in the period to 3.4 million.