Sky Basic split into two packages

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#1967828 4-Mar-2018 11:33

According to Mr Fellet (an interview in the Herald, I think) doing it that way would end up costing the customer more, apparently.

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PhantomNVD

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#1967861 4-Mar-2018 12:17

And that shows that it takes ‘others’ ALSO paying for what you want (that presumably they wouldn’t otherwise choose to have) for it to cost less for ‘you’

Again an argument by Sky for the cross-subsidising approach.

While I see that heavy fragmentation between competing services would cost more, I think that if Sky catered to the ‘many’ that pay for only what they want, the ‘few’ who want niche channels would either pay more to have them, or lose them entirely. (Not a bad thing either IMHO)

tdgeek

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#1967862 4-Mar-2018 12:23

PhantomNVD: And that shows that it takes ‘others’ ALSO paying for what you want (that presumably they wouldn’t otherwise choose to have) for it to cost less for ‘you’

Again an argument by Sky for the cross-subsidising approach.

While I see that heavy fragmentation between competing services would cost more, I think that if Sky catered to the ‘many’ that pay for only what they want, the ‘few’ who want niche channels would either pay more to have them, or lose them entirely. (Not a bad thing either IMHO)

The only issue is what is a niche channel? Mine might differ to yours.

PhantomNVD

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#1967869 4-Mar-2018 12:59

The ones they don’t get subscriber numbers for?
Surely that have some idea of how many are tuned into each channel, and can thus allocate a rough cost/person/channel.
Then offer each channel for a set cost ($1-$15? Where $1=most watch and $15= sub 100 watch ... for e.g.) that would cover their cost+margin and see how many people choose to pay for what they actually want.

Then just drop the useless/niche channels that very few even watch anyway, and focus on the content that ‘many/most’ want and allow the niche markets to have a chance to access these on ‘worldwide’ channels now that Sky hasn’t paid for (and tied up) the local rights?

On a ‘worldwide’ subscriber basis, the niche channels survive anyway, but locally Sky would be able to focus on their popular/core content, free up their bandwidth use for HD /4K on the ‘premium’ channels AND slim down on the excess costs that currently make their product cost more than the market wants to pay.

As someone who used to happily torrent all my content that was locally unavailable/untenably priced... I have not ‘had to’ torrent anything for several years now, with a NFlix and Amazon Prime combo, we get all the content we want, when we want it (with no ads) for a price we’re now happy to pay.

Until Sky finds a way to do this “price we are happy to pay” part, they will continue loosing subscribers until they can’t cover operating costs, and fail.

Pumpedd

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#1967928 4-Mar-2018 15:45

Are they real cuts when you add the $20/month for HD and MySky?

Who would want to watch sport or movies without HD, and MySky is part of the attraction for Sky anyways.

vexxxboy

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#1967930 4-Mar-2018 15:49

Until Sky finds a way to do this “price we are happy to pay” part, they will continue loosing subscribers until they can’t cover operating costs, and fail.

and you have hit on the main problem, there seems to be a big gap to what Customers are prepared to pay and what Sky and in fact all media companies can charge to make money. Spotify loses $500 million a year so they are not charging enough to cover costs and are way beyond making a profit, but what would happen if they doubled the monthly price or have adds so they made money, Social media would erupt.

Common sense is not as common as you think.

ockel

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#1967951 4-Mar-2018 16:24

PhantomNVD: The ones they don’t get subscriber numbers for?
Surely that have some idea of how many are tuned into each channel, and can thus allocate a rough cost/person/channel.
Then offer each channel for a set cost ($1-$15? Where $1=most watch and $15= sub 100 watch ... for e.g.) that would cover their cost+margin and see how many people choose to pay for what they actually want.

Then just drop the useless/niche channels that very few even watch anyway, and focus on the content that ‘many/most’ want and allow the niche markets to have a chance to access these on ‘worldwide’ channels now that Sky hasn’t paid for (and tied up) the local rights?

On a ‘worldwide’ subscriber basis, the niche channels survive anyway, but locally Sky would be able to focus on their popular/core content, free up their bandwidth use for HD /4K on the ‘premium’ channels AND slim down on the excess costs that currently make their product cost more than the market wants to pay.

As someone who used to happily torrent all my content that was locally unavailable/untenably priced... I have not ‘had to’ torrent anything for several years now, with a NFlix and Amazon Prime combo, we get all the content we want, when we want it (with no ads) for a price we’re now happy to pay.

Until Sky finds a way to do this “price we are happy to pay” part, they will continue loosing subscribers until they can’t cover operating costs, and fail.

And that is exactly what a broadcaster will do.

In the case of ad-funded broadcaster - do I take a studio output deal (multi year, all new content coming out) and risk that the content gets enough advertising dollars to justify the output deal (or if not take a onerous contract writeoff like TVNZ has done with its Disney contract) or buy content on a program-by-program (run of series vs life of series) basis. I have to set my ad rates (and deliver eyeballs else next season my rates will have to suffer) such that the content I've bought makes money. If the content doesnt work then I move it around the schedule or drop it completely.

In the case of a subscriber-funded broadcaster - I enter into a multi year deal for a channel at an agreed price (maybe a sliding scale per-sub or flat rate per-sub). When the deal comes up for renewal do I renew based on the viewer metrics or replace it with something else that existing and new subscribers might value? Plenty of examples of this - drop the 5000-7000 viewer Travel Channel and replace it with a reality-tv style TLC. Drop Bloomberg TV and add Fox News. Drop Fashion TV and add The Shopping Channel. Drop The Zone and replace it with Sky Box Sets. In each case its a gamble that the new content has more traction than the previous channel. All measured on a cost-per-viewing-hour. If the financial metrics dont add up (ie not enough eyeballs to justify the content) then it gets dropped.

I imagine though that with something like Discovery - you probably have to buy the other Discovery-related channels. And you're beholden to the content (and timing w.r.t production and broadcast) that someone like Discovery determines. Hence we get stuff that is years old on these channels - rather than fresh off the boat. But thats an aside to the content/channel economics.

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mattwnz

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#1967956 4-Mar-2018 16:59

vexxxboy:
Until Sky finds a way to do this “price we are happy to pay” part, they will continue loosing subscribers until they can’t cover operating costs, and fail.

and you have hit on the main problem, there seems to be a big gap to what Customers are prepared to pay and what Sky and in fact all media companies can charge to make money. Spotify loses $500 million a year so they are not charging enough to cover costs and are way beyond making a profit, but what would happen if they doubled the monthly price or have adds so they made money, Social media would erupt.

It is a case of running at a loss to get market dominance and drive out competitors, then sell the company based on its revenue, rather than profit. Profit can then be gained by raising prices and cutting costs. Prices rises can be gradual. The thing is that in other sectors prices rises occur all the time and can be substatial, eg house build8ng materials, but rarely make the news, because the stories don’t get clicks.

JimmyH

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#1967968 4-Mar-2018 18:02

Hammerer:

I agree that Sky TV has not developed successful online streaming of the sort you are expecting. But the music streaming services aren't directly comparable with Sky TV.

Spotify and Pandora are greenfield businesses in a different distribution channel. Sky TV is primarily a legacy service/technology platform. Their primary service is their distribution channel and it is the fixed costs of that distribution platform that largely determine theiir prices and their strategy.

Yes, all that is true, but I fear you are missing my point somewhat.

I wasn't arguing for a specific price level or necessarily swapping satellite for streaming. I was arguing that if the value proposition (price, content, user experience) is sufficiently attractive then it can compete with pirated product. I was also arguing that Spotify and Pandora have established this in practice, as many sources attribute the decline in music torrenting to these services.

Removing ads is one key way to make the product materially more attractive to viewers, and restore the value proposition in respect of both illicit alternatives, as well with other legal alternatives (Netflix, Lightbox and Amazon etc don't have ad breaks).

I never said that moving to streaming or matching Pandora/Spotify's price point was necessarily a part of removing ads (although the price point chosen is also key to the ultimate value proposition)

Hammerer:

I agree that Sky TV would be more attractive without ads. But that is arguing the opposite of what Spotify and Pandora have done as their free tier is ad-supported.

Again, I kind of agree with you. However, in a TV context I would argue that the analogy of the Spotify and Pandora ad-supported free tier is Freeview; we get it for free in exchange for being bombarded by ads. Sky should be compared to their premium tier, where you pay dollars for a better experience, which includes no ads. If you want to be Sky-specific I would say:

Prime: free to view by all, ad supported, comparable to Spotify/Pandora free tier
Rest of Sky: subscriber only, pay significant sum to view, comparable to Spotify/Pandora premium tier

tdgeek

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#1967969 4-Mar-2018 18:10

Ads are a much debated issue, but IMHO its price. If Sky went ad free, it would be good but it will get hardly any new subscribers.

rugrat

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#1967975 4-Mar-2018 18:28

tdgeek:

Ads are a much debated issue, but IMHO its price. If Sky went ad free, it would be good but it will get hardly any new subscribers.

I disagree. Seems a lot of people like yourselft adds are no big deal.

But I believe that there would be a big number that are like myself that adds are a big deal.

If Netflix introduced adds at 10 minute intervals tomorrow I would hit the cancel button on their service same day.

If Netflix upped by the price by$3 I'd grumble, but still think it's value. (Don't read this Netflix ;)

tdgeek

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#1967986 4-Mar-2018 19:45

rugrat:

tdgeek:

Ads are a much debated issue, but IMHO its price. If Sky went ad free, it would be good but it will get hardly any new subscribers.

I disagree. Seems a lot of people like yourselft adds are no big deal.

But I believe that there would be a big number that are like myself that adds are a big deal.

If Netflix introduced adds at 10 minute intervals tomorrow I would hit the cancel button on their service same day.

If Netflix upped by the price by$3 I'd grumble, but still think it's value. (Don't read this Netflix ;)

I dont think ads are not a big deal. I said that yesterday. But its price. I'd pay $3 to have no ads, everybody would. Why would you grumble at 75c per week?

I dont know what Sky recipes for ads, an ad free price would be interesting. You would think it would be too much otherwise they would have offered it. Maybe some programs have built in ad breaks, unsure on that

tdgeek

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#1967987 4-Mar-2018 19:55

@rugrat here we go. I will work out the numbers as I type this as I just found it

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11595797

Sky TV's advertising revenue generated the fastest increase in the half, rising 17 percent to $42.3 million, and now accounts for 8.9 percent of total revenue compared to 7.8 percent a year earlier. That's in a market where television advertising is sinking, with free-to-air players Television New Zealand and MediaWorks bearing the brunt of the decline.

So two years ago it was $42 million. Say subscribers was 800,000, that is $52.50 and for a half year, so $9 per month. I think a good number might pay that.

ockel

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#1967997 4-Mar-2018 20:33

tdgeek:

@rugrat here we go. I will work out the numbers as I type this as I just found it

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11595797

Sky TV's advertising revenue generated the fastest increase in the half, rising 17 percent to $42.3 million, and now accounts for 8.9 percent of total revenue compared to 7.8 percent a year earlier. That's in a market where television advertising is sinking, with free-to-air players Television New Zealand and MediaWorks bearing the brunt of the decline.

So two years ago it was $42 million. Say subscribers was 800,000, that is $52.50 and for a half year, so $9 per month. I think a good number might pay that.

You honestly think that lifting prices by 18% to have an ad-free service would be something that a good number of people would pay?

Given that pre-Netflix there was 50% of the population that would tolerate ads in return for someone else paying for their content? And that at least half of that population didnt have a PVR to skip those ads.

I think you underestimate how penny-pinching the general population is.

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ockel

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#1967999 4-Mar-2018 20:41

ockel:

tdgeek:

@rugrat here we go. I will work out the numbers as I type this as I just found it

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11595797

Sky TV's advertising revenue generated the fastest increase in the half, rising 17 percent to $42.3 million, and now accounts for 8.9 percent of total revenue compared to 7.8 percent a year earlier. That's in a market where television advertising is sinking, with free-to-air players Television New Zealand and MediaWorks bearing the brunt of the decline.

So two years ago it was $42 million. Say subscribers was 800,000, that is $52.50 and for a half year, so $9 per month. I think a good number might pay that.

You honestly think that lifting prices by 18% to have an ad-free service would be something that a good number of people would pay?

Given that pre-Netflix there was 50% of the population that would tolerate ads in return for someone else paying for their content? And that at least half of that population didnt have a PVR to skip those ads.

I think you underestimate how penny-pinching the general population is.

And lets put that in context - the last time Sky lifted its prices (back in 2016) by something like $1.50/month to recoup half of the increase in content costs..... all hell broke loose.

And when the telcos decided to charge customers $0.99/mth to recoup the telco levy... all hell broke loose.

Really? Lifting prices by $9/mth would get front page headlines and all the ex-Sky subscribers screaming blue murder (cos the coveted content just got more expensive so the jealousy and rage froths forth)

Sixth Labour Government - "Vision without Execution is just Hallucination"

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