Mobile and broadband services propping up pay TV giant, with report that sales of its next-generation TV service have been underwhelming.
Competition from streaming services and a reluctance from younger viewers to pay top money for a full subscription mean Sky TV isn’t the must-have service it once was.
But Sky’s budget TV service NOW, plus Sky’s broadband and mobile services continue to perform well, according to The Sunday Times, which has analysed some of problems currently faced by Sky.
According to The Sunday Times, citing sources within Sky:
- The cost of Sky Glass TVs is higher than planned due to supply chain issues and sales are “underwhelming” after the big launch in 2021. Sky is reportedly looking at creating a cheaper version of Sky Glass.
- 9% of Sky customers cancelled last year.
- While NOW, mobile and broadband divisions perform well, hundreds of job cuts are expected in customer service and among satellite dish installers. However, some engineers will be retrained.
- Sky’s business in Germany is racking up losses.
A senior source told the newspaper that Sky Glass and Sky Stream are “good innovations”, but questioned if they were “enough to save this business”.
The future of Sky TV rests on Glass and Stream:
Sky’s current satellite contract with satellite operator SES for its UK and Ireland service ends in 2028. Unless this renewed, this gives Sky five years to migrate viewers from Sky+HD/Sky Q.
However, Sky did manage to migrate subscribers from analogue to digital in three years between 1998 and 2001.
▶ Analysis: Further challenges ahead
Sky TV is set to face a major overhaul in two years when its HBO content deal with Warner Bros Discovery expires. The HBO deal originally facilitated the launch of Sky Atlantic. Warner Bros Discovery also carries a large number of TV channels on the platform, meaning the company will have substantial negotiating clout over Sky.
In an early sign of the change in the power balance between the two companies, in 2022 Sky secured access to BT Sport (soon to become TNT Sport) on its platform to “beyond 2030”.
This deal is part of a wider Sky strategy to become a content aggregator, a place where viewers can find all the different streaming apps and live TV services in one place, under one operating system.
Without these partnerships, the remaining Sky TV service would be relatively limited.
But Sky continues to benefit from having invested in broadband services. With it, it can continue to count TV ‘cordcutters‘ as its customers. Sky Mobile’s promise not to increase prices mid-contract has also attracted budget conscious customers.
What has Sky said?
In response to The Sunday Times, Sky said:
“Sky’s unique business is built on constant innovation. In the last three years we have revolutionised our offering, transforming our TV platforms through Sky Glass and Stream to be a home for all the best apps.”