Not in deep trouble, they lost a small %. Previous years it been very small. yes, low margin is exposure.
Yes, it's more of a slow hemorrhage than an arterial bleed, but it isn't a one off. It's a trend, and not only is that trend continuing, it seems to be accelerating. Cable providers overseas are seeing a similar phenomenon. They have a high fixed cost base. While this rate of subscriber loss won't kill them immediately, or even for some time, it will kill them in a few years if it goes unchecked.
At $12 per month per subscriber they cant drop HD as they pay Optus extra for that. Any small price decrease, say $10 per month means goodbye profit.
The $12 per subscriber average profit analysis misses the point somewhat. HD is sunk cost. It costs them to produce the material and lease the transponder bandwidth, regardless of uptake. It only costs them insofar as those subscribers who pay for the ticket don't any more. Plenty of subscribers don't pay for it, and extending it to them costs zero.
Rising costs as subscriber numbers fall and fixed costs have to be spread across an ever-smaller user base will probably hit the ARPU by more than $12 in the not too distant future, if the current rate of subscriber decline continues. If they want to continue with a satellite service similar to the current one for more than a couple of years, stopping that bleed is critical. And I see no sign that they know how to do it.
Sky should shift pricing around but they cant make it cheaper, its already quite cheap, based on what it costs to provide sport.
Price is only half of the value equation. What you get for the money is the other half. If they can't drop prices much, then they need to improve the value proposition by improving the viewer experience. People will pay for a good product if it represents quality and value. That's why Lada's haven't driven Mercedes Benzes from the markey. But if they want to price something as a premium product and compete successfully, then it has to actually be a premium product that viewers value and enjoy. Standard definition, low bitrate fare constantly interrupted by ads and promos isn't