Analysts Warn Against Free Sky+ Boxes

Top city analysts have warned Sky that a move towards providing free Sky+ set-top boxes to subscribers is uneconomical and could cost the company around £2 billion in total.

A report by Broadcast magazine states that Citigroup analysts fear a full subsidy could cost the broadcaster around £250 per subscriber. The company’s UK TV report claims that, given the strength of Sky’s subscriber base and the lack of competition in the multi-channel market, it would be ill advisable to offer free Sky+ boxes at present.

Citigroup’s report follows speculation that Sky may soon offer its premium Personal Video Recorder (PVR) product to subscribers free of charge, ahead of the launch of HDTV next year, the equipment for which will feature the technology as standard (see New Sky Box To Pack Broadband For On-Demand TV).

However, speaking at the release of the Sky’s annual results, BSkyB chief executive James Murdoch said: “I’ve said before – we have no plans right now to fully subsidise the Sky+ box.”

A move to fully subsidise the company’s PVR technology would undoubtedly improve the stability of Sky’s customer base, with research into the technology showing its ability to vastly reduce churn, and deliver more perceived value to subscribers.

Speaking at last year’s Media Research Group conference in Madrid, Sky Media’s managing director, Nick Milligan, revealed an overall churn rate of around 1% in Sky+ homes, compared to Sky’s standard rate of just over 9%. The broadcast boss stated that the broadcaster hopes to have converted 25% of Sky homes into Sky+ homes by the end of the decade (see Sky Introduces New Products At MRG Conference).

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