Sky added just 30,000 new TV customers in the three months to the end of March after the firm moved away from the aggressive discounting which has helped secure its status as the UK’s biggest pay-TV operator.
Churn – the number of customers leaving the service – grew from 10.1% in March 2015 to 10.7% as the company limited the number and scale of discounts it offered new customers seeking to cancel their services.
Traditionally Sky has offered customers looking to leave a range of discounts in order to retain their custom, something many savvy customers with no intention of leaving have exploited by pretending they wish to cancel at the end of their contract.
The company said the move away from offering financial incentives to remain “impacts the quarter by around 10,000 additional customers churning.”
CEO Jeremy Darroch said Sky was now looking to grow and retain custom through a mix of “world class content, commitment to innovation and brilliant service” rather than with heavy discounting.
The quarter saw the retail launch of the new Sky Q internet-connected set top box which the firm has focussed on in marketing and promotions.
Darroch said: “We are pleased with the early response to Sky Q, as we focus on establishing this premium product in its first market.”
UK revenue grew 6% from £5.8bn to £6.16bn in the nine months ending March 31st.
Sky’s move towards a “premium” offering and rowing back from heavy discounts could help smaller players such as TalkTalk and BT increase subscribers to their TV offerings which are aimed at customers looking to spend less.
Commenting on the results, Imran Choudhary, consumer insight director at Kantar Worldpanel, said: “Sky has had a difficult few months, especially in the face of stiff competition from BT.
“The slip in new television subscribers dropped Sky’s share of customer acquisitions significantly; if BT continues to make strong ground Sky could drop to second within sales – unthinkable just a few months ago. However, Sky still has a market leading share within active TV subscriptions with over one in three households in Great Britain on a Sky package.
“By reducing discounts Sky has made a clear indication of its change in strategy by focusing on its large existing TV base; encouraging customers to trade up to higher margin yielding subscriptions rather than driving footfall at any price.
“Historically Sky been very successful at increasing revenues among its existing customers but it will take time. The fresh challenge is convincing consumers of the need for a premium offer like Sky Q over cheaper subscription and streaming services.”