HD has "moved centre-stage": Sky
The number of customers taking Sky's high definition service has more than doubled to 1.313m in the year to June 30, growth that it said generated annualised incremental revenue of over £100m against a total investment in HD during the year of £130m.
"High definition is setting the new standard for TV quality," the company said. "Around 9 million homes have HD-ready sets today, and this is expected to increase to almost 14 million by the end of the decade. Accelerating take-up of Sky+HD is an attractive opportunity for our business, driving revenue growth and high returns. Building on the success of last year, we will further build on our leadership position in 2010 through continued growth in Sky+HD customers and the launch of more high quality HD channels."
Sky said that 90% of new customers during the second half of its financial year joined to take Sky+ in either its standard or high definition form, compared to 56% during the same period the previous year.
"Sky+HD acquisition and upgrade costs per customer have been in line with our expectations and the payback profile of accelerated HD growth remains highly attractive," the company added. "The majority of costs are geared to demand; Sky+HD customer acquisition costs have been incurred in proportion to take-up and will be recovered on average within 18 months. Customer response to lower pricing was strong, leading to 534,000 HD additions in the second half of the financial year. This resulted in investment of around £130 million which was fully expensed in the year. This includes £15 million of fixed cost (as previously announced) relating to the creation of around 1,000 new jobs to support accelerated demand and is net of related HD product subscription revenue.
"These incremental customers are already generating annualised revenue well in excess of £100 million, and as such growth in HD customers remains highly attractive for our business. Further, the growth of Sky+HD will create a larger installed base of our most advanced boxes, providing us with a platform for further innovation and the launch of new services for customers over time."