BSkyB Takes Increasingly Dominant Position In UK Pay-TV Market
BSkyB’s increasingly dominant position in the UK pay-television market looks all set to strengthen, as this Friday’s first quarter results are forecast to show a net rise in subscribers of 205,000 (see Good Growth Expected In Sky’s Q1 Results). This will take the number of customers to its digital satellite service to 6.3 million.
Sky commands approximately 62% of the pay-TV market in the UK, with cable taking the remaining 38% now that ITV Digital has collapsed.
The current trend is for cable’s market share to decline whilst Sky’s grows. This is partly because churn is higher at the cable operators (around 20%) than it is at Sky (around 10.5%) and partly because both Telewest and NTL are undergoing financial restructure and so currently have little cash to spend on customer acquisition (see Telewest Defers Payments Ahead Of Restructure).
This situation has resulted in BSkyB accounting for the entire net pay-TV customer additions at present; by 2005 it is predicted to hold a 67% share against cable’s 33%. However, the overall size of the UK’s pay-TV market is shrinking as a result of cable’s weak performance.
| UK Share Of Pay-TV Market, By Platform | ||||||||
| Q4 2000 | Q1 2001 | Q2 2001 | Q3 2001 | Q4 2001 | Q1 2002 | Q2 2002 | Q3 2002 | |
| ITV Digital | 10.5 | 10.9 | 11.1 | 11.7 | 11.9 | 0.0 | 0.0 | 0.0 |
| BSkyB | 52.5 | 53.0 | 53.3 | 53.0 | 53.9 | 62.3 | 64.0 | 66.5 |
| Cable | 36.9 | 36.1 | 35.6 | 35.3 | 34.2 | 37.7 | 36.0 | 33.5 |
| Source: Company data/Lehman Brothers estimates, November 2002 | ||||||||
