PVRs Could Be The Next Killer App For BSkyB

Speaking at a Merrill Lynch-hosted TMT conference this week, Sky’s chief executive, Tony Ball, outlined some of the company’s forthcoming plans. PVRs look set to figure prominently in these strategies, as falling hard-disk costs will allow the group to market the digital recorders at a price that is more attractive to consumers.

Whilst PVR technology is causing ripples of worry in the advertising community because it allows viewers to skip the ads (see Ad Avoidance As High As 80% For PVR Users), for cable and satellite operators it could provide a whole new revenue stream.

Also at the conference, the group reiterated that it could exceed the targets of 7 million subscribers by the end of 2003 and average revenue per user (ARPU) of £400 by year-end 2005. The current business model can sustain up to 9 million customers without diluting ARPU. Beyond this, cheaper mini-packages may be needed to entice more customers and this would reduce ARPU.

Football contracts BSkyB also said that it has bid, in conjunction with the BBC, for the FA Cup broadcasting rights. The offer is below the existing contract price.

Sky is also expecting the Premiership rights to remain exclusive, following a European Commission investigation into how rights to the matches are currently sold (see Regulators Move The Goalposts On Football Rights). Sky has tabled a bid which is based on this continued exclusivity. However, should the EC decide that the rights must become non-exclusive, Sky says that it will ‘aggressively’ reduce its bid.