BSkyB Targets Non-Sports Subs With Marketing

By | October 18, 2004 | Feature

The U.K.’s BSkyB is likely to have to accelerate subscriber growth rapidly at the end of 2005 if it wants to have a chance of making its stated target of eight million subscribers by the end of next year. The operator hopes a new marketing drive will pay off handsomely.

The operator, which has seen subscriber growth slow in the first part of this year — adding a touch fewer than 150,000 subs – still is confident it can reach that eight million-sub number, although some analysts are not so sure.

“They are going to have to pull out a couple of really big quarters at the end of next year. At the peak of acquisitions, Sky was running at around 200,000 subs a quarter. They did 450,000 in the last half of 2002,” Nick Bell, a media equity analyst at Bear Stearns, told Satellite News. “Even with a churn rate of less than 10 percent, when you have 7.5 million subscribers, you have got to be adding 750,000 a year just to be standing still. My guess is they won’t quite make 8 million. I reckon they will achieve around 7.8 million, which would still be decent growth.”

Paul Richards, a media equity analyst at Numis Securities, added, “The real push to get up to 8 million will be in the third and fourth quarters of next year. It doesn’t mean that 8 million is out of reach. I spoke to the senior management recently, and they are still very confident they can gain 8 million subscribers.”

The new marketing push really is aimed at promoting the depth and breadth of content BSkyB has available, which appeals more to the non-sports audience. The operator hopes to re-introduce its brand to people who have not subscribed to pay-TV services in the past. BSkyB is running numerous television commercials, press advertisements and posters to highlight the depth of its offer. BSkyB also is putting together a prospect database so it can better analyze information in non-subscriber households.

The marketing push could be viewed as a strategic shift.

“They have probably gone as far as they could have done with the previous strategy, which is very much a one size fits all. They were going to try and get as many people on the top tier as possible,” Richards added “I think there has been an appreciation accelerated by Freeview that you need to target a wider range of people. There are a lot of people who do not want to spend $73.60 a month for their television, but they would appreciate one of the lower-priced packages. I think they have made the right shift in terms of strategy and it has come at the right time.”

The operator is looking at different ways now to boost ARPUs in addition to subscriber numbers. It already is making heavy pushes with its Personal Video Recorder (PVR) offering, Sky+, and it is heavily pushing its multiroom strategy, where customers pay a slight premium to have a second set-top box (STB) in the house. It also plans to launch a Free-To-Air (FTA) satellite service later this year, where subscribers pay for installation and STB costs and then receive a certain number of channels for free. The theory here is that BSkyB ultimately would like to upsell these consumers to its pay-TV packages.

The operator also aims to build its own Sky One as being one of the premier entertainment channels in the UK. This, alongside PVR, multiroom and other services and content, could open up new markets for Sky in the United Kindgom and Ireland, although it likely will be far from easy.

In some ways, BSkyB has reached a crossroads. It is targeting new segments of the market, which previously have been highly resistant to pay-TV. However, if its new marketing drive is successful, BSkyB could offer a model for other pay-TV operators in Europe on how to keep subscriber growth going after you’ve pretty much exhausted the sports — and maybe even the movies — audience. Diversity is key.

(Contact Robert Fraser, BSkyB, Robert.fraser@bskyb.com)

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