Today both BT and Sky released their latest market updates and the two sets of results have some interesting numbers for followers of the UK’s increasingly competitive pay-TV market.
First up BT which published figures for the three months ending June 2016 – the first quarter of its financial year – showing the country’s third biggest TV provider now has 1.6m subscribers, up from 1.5m in the previous quarter.
A 100,000 rise in customers in a single quarter would be truly impressive and yet the firm only reports the addition of 59,000 new TV customers in the period.
So where did the other 41,000 come from?
These would seem to be the entirety of the TV customer base BT inherited when it bought EE.
The 1.5m figure comes from BT’s Quarter 4 figures when it was still reporting BT Consumer’s numbers as a distinct item.
As of its Q1 update, BT now reports all group-wide consumer TV, mobile and broadband gains and customer numbers as combined items, regardless of whether the customer signed up with BT or EE.
So deducting the 59,000 new TV customers from the new total TV user base we can see that BT Group started the quarter with 1,541,000 TV customers and as we know it ended the previous, pre-combined results, quarter with 1.5m, the extra 41,000 must all be EE TV subscribers.
Or to put it another another way – for all the noise and bluster EE made about its TV platform, it only managed to sign up 41,000 customers from a broadband base of circa 930,000.
The service could have grown a little since EE became part of BT because the 59,000 new customers are TV signups “across BT” – i.e. combined BT and EE gains – but given BT TV signed up 66,000 customers on its own in Q4, it’s unlikely the majority, or even a substantial number, of new Q1 customers signed up to EE TV.
Moving on to Sky’s results (which cover the 12 months ending June) it seems the firm has finally tired of bargain hunters pretending they have any intention of leaving the service in order to squeeze a discount out of it.
Social media and certain forums are full of advice on how to call up Sky threatening to leave in the expectation that a discounted or even free extra will be offered.
If no sweetener is forthcoming, or if the caller is unhappy with the size of discount offered, customers who have absolutely no intention of missing out on Game of Thrones are advised to cancel and reassured that before their 30 day notice period has expired a very generous offer – sometimes up to 50% off – will be made.
Some even boast of turning down this offer and waiting to see what the company offers in the days and weeks after the service has actually ceased.
For a long time Sky seemed to accept the rationale that it was better off keeping these customers at any cost because some revenue from them was better than none.
But with its content costs rising – in part because of competition from BT for sports rights, but also increasing competition from Netflix for entertainment content – the company seems to have tired of giving away premium content and premium equipment for sub-premium prices.
Perhaps partly emboldened by the success of its contract-free Now TV service, Sky has reduced the scale of discounts and scope for equipment upgrades which it’s willing to offer to keep people subscribing to its senior platform.
According to the latest update this approach, along with a recent price hike, has seen churn (the number of customers leaving the service) in the UK rise to 11.2% – up from 9.8% the previous year – marginally higher than the rate in its Italian business (11.1%) but significantly higher than in Germany and Austria (9.9%).
The ability for customers to hold out for a bargain is likely to diminish over the coming years as the new Sky Q service has shifted the power in Sky’s favour as set top boxes, unlike previous models, are loaned to customers and must be returned at the end of the contract.
Customers who let the service expire in the hope of a better offer coming through their letterbox will, in future, find themselves without a set top box and paying for an installer to return and fit a replacement.
Increasingly it looks like Sky will start acting like most other retailers and have a listed asking price which most, if not all, customers will be expected to pay.
Those unhappy with the price will have the option of the less feature-rich Now TV or simply going without.