While much of the detail of a digital TV report by Ofcom, the UK regulator, this week focused on pay TV leader BSkyB, once again the thing that drew our attention was just how many people in the UK are getting their TV for free from satellite.
A cursory glance will suggest that this number hasn’t really grown, and stands at about 600,000 homes, out of a 25.6 million household universe, but that hides a key truth, which is that Freesat, the BBC and ITV run free satellite TV service, featuring 150 channels and available for less than a year, now has over 300,000 subscribers and its quarterly additions have now risen to 125,000, around three times that of pay TV second placed company Virgin Media. BSkyB has added 150,000 net additions over the last three months but is likely to be overhauled by Freesat, very probably in the next quarter.
Freesat has only really just started advertising on TV and the graph below shows the state of UK TV additions for the past quarter, with the well established Free to air DVB-T Freeview service adding over 452,000 TV sets, and around 85,000 homes which are choosing to only use Freeview.
BSkyB’s Q4 results reported a total increase of 171,000 in subscriptions with around 150,000 being homes which are either new to Sky or which rely on it entirely. The rest are mostly additional TV sets attached in other rooms.
Right now Sky’s numbers make it look like there is no recession, and show a lot of promise in terms of Sky’s figures for investment. It now has 9.24 million subs, up 406,000 over the past year. There are additions for multiroom up 68,000 during Q4 to 1,723,000 and the Sky+ DVR got installed at another 515,000 subscribers in Q4 meaning that over half of Sky homes now have one. HD subscribers are now 779,000, just 8.4% of all Sky subscribers at the end of 2008 and churn has gone down slightly and is going down all the time.
But this, like Comcast in the US, is all about squeezing more and more money out of customers that have not yet seen how good other options are and both Freesat and Freeview are now growing at alarming rates and it’s our bet that Sky will have trouble growing for much longer during the current recession.
Freesat sales reached 300,000 in March, and were at 233,000 at the year end, up from 108,000 in Q3. Interestingly given the huge HD capacity of the current satellite and its capability of offering HD, 172,000 of those units are HD receivers, well over half.
The other worry for Sky and other pay TV services is that the fourth quarter saw the highest sales of DVB-T (digital terrestrial) equipment in any quarter, with almost 4.5 million units sold, up by 5.9% on Q4 2007. This was largely driven by record sales of integrated digital TVs during the run-up to Christmas, with nearly 3.1 million units sold, up by almost 34% year on year. Of course many of these are replacements, but as this free viewing community upgrades to using DVRs, which have only been on the market in volume for a while, Sky will have a more difficult job unseating them. Freeview only households have now reached 9.8 million homes, a number reached in about a third of the time it took Sky to reach a similar number.
Cable in the UK now reaches just 12.8% of homes at 3.6 million and has not gone up appreciable for some time. Virgin Media reported net additions of 44,500 subscribers.