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COMPAN Y OVERVIEW
Since its official launch in 1998, Sky digital has flourished, growing from 225,000 customers to 7 million in 2003 then 9.95 million in 2010 with 16,500 employees, Sky Digital stands as the UK’s top pay television provider. Sky Digital is the brand name for British Sky Broadcasting’s digital television service transmitted from Astra Satellites. BSkyB’s analogue broadcast ended in 2001, so the service is now commonly marketed as Sky Digital, making it the world’s first digital-only service provider. Sky digital also enables viewers to perform a wide variety of interactive tasks ranging from sending email, shopping, betting and banking (Sky, Key facts and Figures, 2010).
SkyTV had already placed 750. which would then be split 50-50 for 12 years until 2008. The agreement also included a scale of dividend payments: after reaching profitability. Start-up costs reached £122 million. ITV and Channel 4. By the time BSB finally launched its service in April 1990. By then. and by the mid-1980s Murdoch was already looking to evolve the Sky concept toward the newly emerging direct satellite broadcasting technology and to focus the television subsidiary on the British market. Six months later. was established in 1988 and announced plans to begin broadcasting in mid-1989. against BSB claims of 750.5 billion. Murdoch had not abandoned his British satellite designs. was nonexistent in the United Kingdom (Sky. he pushed ahead with his SkyTV concept. with its powerful parent companies prepared to invest as much as £1. with a breakeven point projected for 1993 at the earliest which seemed more unlikely as the weeks went by. Cable television. Rather than making use of existing satellites. now known as British Sky Broadcasting. to a Philips-designed receiver dish known as a "squarial.000 figures that included cable-based subscribers (History of British Sky Broadcasting Group PLC. with a break-even point of three million households expected to be reached in 1992. as it was known then. or BSkyB. however. By law. however. Sky Channel proved less than successful. given that each week was costing the BSB partners more than £8 million. broadcast television was restricted to just four channels the two license-fee backed BBC channels and two advertiser-supported channels.2 million per week. engaged in a bitter rivalry for the home satellite market. Key facts and Figures. it was still the early days of the British satellite market. meanwhile." Technical problems with the system delayed BSB's launch for more than nine months. a European-based satellite-tocable broadcaster providing a mix of English-language sports and entertainment programming to much of Europe's cable television systems. called D-MAC.3 billion into the company compared to Murdoch's growing struggles to meet the interest payments on News International's debts of more than £4. The two companies announced their intention to merge in November 1990. Key facts and Figures. Meanwhile. with the BSB side contributing £70 million and Murdoch adding the remainder. while the satellite company was losing more than £2. 2010). BSB. BSB held the financial edge. and despite SkyTV's initial subscriber lead. at 3 . Murdoch's financial problems determined the next phase of the British satellite television industry (Sky. SkyTV still appeared in better shape than BSB. losses for its first year of operations were £95 million. Nevertheless. BSB was confronted with a shortage of squarials. Nonetheless. until April 1990. That service had already spent approximately £800 million by November 1990. BSB no longer had an exclusive on the British satellite market. SkyTV had reached more than 1. the company determined to build and launch its own satellites and to broadcast using a new technology. both companies were haemorrhaging badly.000 satellite dishes. News International would receive 80 percent of the first £400 million in dividends. Rupert Murdoch's News International set up Sky Channel. Murdoch's investment in SkyTV already totaled some £400 million. The two sides agreed to put up £100 million in working capital.5 million homes. with its television viewing potential of more than 20 million households. 2010). In the end. represented a 50-50 ownership between Murdoch and the four BSB investors. The newly merged company.BRITISH SATELLITE BROADCAST (BSB) VS SKYTV IN 1980S In 1983. generating under $20 million per year in advertising revenues. 2008). even after starting up. Satellite television represented a significant step in British television history.
BSKYB IN 1990 The newly merged company appointed Sam Chisholm as the broadcaster's CEO. which included firing most of the former BSB staff total staff dropped from 4.000 managing to reduce the company's losses to just £1. to keep the company afloat. while advertising revenues added another £1 million each week.500 to just 1. Subscription revenues reached £3. worth some £700 million. 2010). Chisholm was placed in charge of repairing the damages at company. Key facts and Figures.6 million per week by the summer of 1991. The company continued to post operating profits through the year. fully a year ahead of schedule (Sky. 2008). These losses continued for six months. BSkyB was showing its first operating profits. of £100.000 per week. Chisholm pushed through an extensive series of cost-cutting procedures. the former SkyTV staff quickly dominated the workforce. By March 1992.which point BSB would receive 80 percent of the next £400 million. Within the company itself. and by the end . forcing Murdoch and partners to arrange a refinancing package. virtually replacing all of the former BSB managerial and other staff (History of British Sky Broadcasting Group PLC. Recruited by Murdoch in September 1990. which posted a loss of £14 million in its first week of operations.8 million weekly.
including Sky Sports Extra which allowed viewers access to instant replays.of the company's 1993 fiscal year BSkyB was posting an operating profit of nearly £186 million.000 digiboxes and secured its position as the fastest-growing digital platform in the world. passing the critical three million mark in 1993 and topping 3. the company's virtual monopoly on the British satellite television market continued to bring in new subscribers. 2010). or set-top boxes. 5 . In just 30 days. the United Kingdom's first digital television service.2 million new subscribers. revolution in television history . and minidishes. match statistics. Sky digital. Key facts and Figures. Sky digital had gained 1. 2010). Source: UK satellite evolution vector DIGITAL SKY LATE 1990’S AND BEYOND TV While BSkyB's fortunes continued to rise with revenues topping £1 billion and pre-tax profits of £257 million by year-end 1996 the company also hastened to join the next. and perhaps greatest.digital broadcasting. As BSkyB expanded its multichannel offerings. The launch of BSkyB's digital service in 1998 was enormously successful.5 million households by mid1994 (History of British Sky Broadcasting Group PLC. This growth continued at a rapid clip and was bolstered by the company's decision to give away free digiboxes. 2008). often accompanied by subscription fee increases. With the capacity of offering as many as 500 channels. highlights and an interactive shopping channel (Sky. the company sold over 100. In 1998. as well as interactive services such as video on demand and telephony applications. Within ten months of the promotion. Key facts and Figures. the company also launched several interactive services. the dawn of digital broadcast technology was quickly making BSkyB's analog equipment appear obsolete (Sky. easily carved out a leading position in the industry with its offering of 140 channels.
The company developed Freeview that year.The company introduced the first interactive advertising campaigns in 2000 and rolled out Sky News Active. It also launched Sky+. BSkyB shuttered its analog signal. becoming the world's first nationwide provider to rely solely on digital service. Comreg June 2009. 2010). That year. the firm's digital subscriber base had surpassed five million. Key facts and Figures. The firm defined DTT as television channels using digital signals delivered to homes through a conventional aerial and then converted through a digibox or set-top box. Source: Ofcom ‘Digital Television Update March 2009’. 2009). BSkyB expanded into music television with the launch of three new channels. The launch of Sky broadband brought more of a choice to UK broadband users (Sky Timeline. By 2002. In 2003. offering customers three channels through digital terrestrial television (DTT). Sky digital programming was broadcasted into a quarter of all British households. By 2006. . a fully-integrated personal video recorder. the world's first interactive television news service. Company information as at 30 June 2009 In 2005. Sky+ HD became UK’s first nationwide high definition television service and is also the first major media company in the world to become carbon neutral. Sky news and Sky Sports were streamed to mobile phone as part of the new Sky Mobile TV service. By 2001. The company signed its seven millionth subscriber in October of that year (Sky.
Source: GfK and Sky estimates. 7 . Data for HD TV sets over 26 inch screen size. Sky HD Subscribers as at 30 June.
THE PRESENT .
it continues to grow its customer base by attracting new customers and secondly it offers take-up of additional products for existing customers.OVERVIEW AND ENVIRONMENTAL AUDIT Sky Broadcasting (BSkyB) operates the leading pay television broadcast service in the UK and also provides broadband internet and telephony services. It has made a commitment to high definition (HD) television which has enabled the company to dominate market share in this sector. Firstly. suppliers and communities in which they operate. It is also the UK’s fastest growing broadband provider and is currently growing its market share in home telephony (BSkyB 2010). BSkyB’s marketing communication mix recognises the company’s responsibility towards their customers. The company has a total of 8. a move which the organization believe will save around £20 million in energy costs each year. The company’s marketing communication mix is largely centered on its objectives of achieving organic growth by moving existing customers away from standard television 9 . such as the transition from analogue to digital broadcasting and the provision of digital video recorders such as Sky+. Sky has shown that it is prepared to take risks and has been able to keep moving forward to meet customer needs. movies and sports. The company is committed to its corporate responsibility strategy by providing an energy efficient service and have implemented measures since 2001 BSkyB to help customers to reduce their energy use by extending their ‘auto-standby’ feature to all active Sky boxes. news. as well as 90. The company has entered the communications sector and challenged the established providers with the quality and value that has made Sky the UK’s fastest-growing broadband and home phone provider.000 tonnes of CO2 (BSkyB 2010). The marketing strategy of BSkyB is focused around two key aspects.8 million customers and runs a comprehensive content portfolio spanning entertainment.
Churn represents the number of DTH customers over a given period that terminated their subscription. This has enabled the organisation to diversify its product portfolio and expand its business Marketing costs since early 2010 have increased by £58 million to £302 million (Start 2010: £244 million) due to increased investment in marketing campaigns in home communications and Sky Sports for the current football season. Demonstrating good performance and growth despite operating in a touch economic environment compounded with the effects of a global recession. This increase is possible due to a strong demand for new HD consumers. Customers are defined as the total number of residential and commercial direct-to-home (DTH) customers at the close of a given period. HD products including phone and broadband services. The Group also retails certain Sky channels to a limited number of DSL subscribers which are included. Sky has increased its new subscriber costs by £31 to £339 this year. with which the organisation is increasing its market share. This has resulted in a large increase in the proportion of new customers subscribing to HD directly on joining Sky as almost half of new customers in the fourth quarter of 2010 chose to pay an additional £10 a month for the HD channel service (BSkyB 2010). expressed as a percentage of total average subscribers (measure of customer satisfaction) Sky+ penetration is defined as the percentage of customers viewing their TV through a Sky+ or Sky+ HD set-top-box. The company is of a totally different size in comparison to three years ago. A distinct advantage of Sky’s interactive service is the company can target entertainment packages and customise its offers based on consumer usage trends which it can monitor closely through the HD interactive service (BSkyB 2009). broadband and telephony has increased due to a strong marketing campaign. the total number of customers has increased by 15%. . The percentage of DTH customers taking each of TV. (BskyB 2009) Total customers are defined as the total number of residential and commercial direct-to-home (DTH) customers at the close of a given period. Over the past three years.packages to Sky plus.
(BSkyB 2009) 11 . The percentage of total customers taking up any television products and both a Broadband and a telephone product have also increased year on year.(BSkyB 2009) HD penetration is defined as the percentage of customers paying an additional monthly subscription to view HD content. This take-up of HD is an important measure for customer satisfaction while also generating incremental revenue and profit for Sky.
though. They have agreed to allow the regulatory process to continue. and will negotiate later on price. The newspaper publisher already owns 39. Secretary of State for Business Vince Cable has issued an intervention in the deal under the Enterprise Act.1% of the satellite broadcasting company and has made an £8. Sky have identified drama and the arts. meeting needs that are increasingly less well served by free-to-air broadcasters.5 million viewers each month. CORPORATE AND MARKETING ANALYSIS .BUSINESS AND STRATEGIC PHILOSOPHY Sky’s key business strategy has been focused around the emergence of HD technology and has taken advantage by positioning the business to centre its marketing strategy on this product. The organisation has doubled its arts output by expanding the Sky Arts portfolio to include four dedicated channels with an average reach of around 1. He has asked Ofcom to assess whether the deal will create too great a concentration of media ownership in the UK. which are listed on the public markets.3 million since the start of the financial year (BSkyB 2010). as two genres where the company can reach out to new audiences. In January 2009. BSkyB's independent directors have rejected the 675p per share offer and say they will only consider an offer of 800p per share or more. In this quarter Sky has completed the acquisition of the Living TV Group and also announced the introduction of a new channel Sky Atlantic HD to extend its entertainment portfolio to complement its emphasis on drama and comedy THE ROLE OF GOVERNMENT The Government has asked media regulator to assess the affect on media plurality of the proposal from Rupert Murdoch's News Corporation to take over BSkyB. the company made a conscious decision to accelerate the growth of HD technology following the acquisition of Amstrad. Consumer response has been exponential with the total number of Sky+HD customers more than doubling to 1.2 billion offer for the remaining shares of the company.
Subscriber acquisition cost was £308 reflecting the improvement in premium box mix. Higher volumes of premium box sales (Sky+ and Sky+HD) partially compensated for lower hardware prices. Marketing costs increased by 22% to £907 million reflecting the strong demand for Sky+HD throughout the period and our decision to accelerate the take-up of the product through a lower retail box price. In addition to its own customer magazine and point of sale advertising in retail outlets which sell its products and services including Sky retail stores. The organisation also act as the advertising sales representative for certain third party channels.com.Sky product promotion communication mix is marketed through all possible types of media. compared to 56% in the comparable period (BSkyB 2010). CORPORATE AND OPERATIONAL REVIEW 13 . by selling advertising time across all of the Sky and third party channels. hardware and service revenue decreased by £41 million to £235 million (2008: £276 million). Installation. The company also regularly advertises promotions using internet online advertising on both third party websites and on sky. The organisation regularly uses the press (including both national and regional newspapers and magazines) due to its links with the News of the World. door drops. through Rupert Murdoch ownership. Wholesale subscription revenue increased by £25 million to £206 million (2008: £181 million) reflecting the return of its basic channels to Virgin Media’s platform in November 2008. outdoor activity (such as billboards and bus backs). on-air advertising on both national and regional radio and television channels (on both promotional and commercial airtime). The Sun (Britain’s best selling newspaper) and the Times. In 2009 Sky obtained £308 million of its revenue from advertising sales (2008: £328 million) advertising for all of the 26 Sky Channels. with around 90% of new customers in the second half of the financial year joining Sky with either a Sky+ or Sky+HD box. direct mailings. It also takes advantage of media inserts.
the organisation is seeing a dramatic shift in awareness of HD and more and more people are starting to regard HD quality as standard. Annual net customer additions were 462. Sky has more than doubled the base of HD customers during the year to 1.000. the enhanced picture and sound quality of HD and an outstanding range of content from great brands.000 in the last six months alone.In the 12 months to 30 June 2009. 16% higher than the prior year. adding 534. Behind this performance is the innovative Sky+ technology. As a result. Sky believe the migration to high definition quality TV is a significant opportunity for its business.442 million.3 million. and content producers are embracing HD at a faster rate than ever before. Sky witnessed accelerated customer growth as consumers responded to the quality and value of Sky’s services. SWOT ANALYSIS Strengths . Throughout the year. taking around 50% share of UK broadband net additions. There is growing penetration of HD-enabled devices such as Blu-ray players and game consoles. taking the total base to 9. Approximately nine million households already have HD-ready TV screens and this is expected to reach almost 14 million by the end of the decade. Sky has maintained its position as the fastest-growing broadband and telephony provider. The company invested around £130 million in the second half of the financial year and these customers are already generating incremental run-rate revenue well in excess of £100 million.
fiscal factors .At the end of the Financial Year 2010. According to IMF (2010). or a change in strategy relating to the distribution of the group’s channels. it is remarkable that ARPU (Average Revenue per User) has increased from £427 in 2008 to £508 in 2010. The number of customers cancelling their service throughout the year decreased by 0. The group derived £238 million of its whole sale revenue from VM platform in 2010 (Virgin Media 2010). an additional 10.9% in 2009.2% in 2010.2%. The rise of VM has compromised the future and security of BSkyB. From a marketing perspective. betting and gaming amongst other activities. interactive services. The UK real GDP is forecast to report sluggish growth of 1.K received Sky channels through other DTT platforms (BSkyB 2009).000 broadband users and 517. showing an improvement in customer satisfaction (BSkyB 2010). This may affect the group in two aspects.4 million. The wide product portfolio is an additional core competency for the group as a whole. Against the background of the Euro area’s debt crisis. Secondly. This shows that customers are more willing to pay a premium if the service is sufficient (BSkyB 2010). firstly. may adversely affect BSkyB's wholesale revenue and other revenue which it receives from VM in connection with supply of the Sky Premium and Basic Channels. The worsening conditions do not positively influence development to premium services such as BSkyB’s.2 million watchers in U.000 telephone customers were added to increase the customer base to 2. one in five customers opts for the package of TV. pay-per-view. BSKYB provides home communications products. an increase of 5. the real GDP growth rate for the UK declined from 0. all of which have a degree of complementarity. there were 9. premium channels. They offer basic channels. IMF has recently lowered its projections for the UK growth in 2010.000 more compared to last year and determines an annual growth rate (CAGR) of 5%. Further strengths include: • Established distribution channels • Own production capability • Technological development / Research and Development Weaknesses Virgin Media (VM) is the major cable systems provider in UK and is BSkyB’s main competitor.1% in 2009. the market variations. At the end of the financial year 2010.5% in 2008 to negative 4. the loss of VM as the group's distributor can extremely influence the group’s business. 15 .9 million BSkyB DTH (Direct to Home) users which is 418. In addition to this in March 2010. Today. telephony and broadband in their home. 421.
Further weaknesses include • Poor reputation and relationship in relation to interacting with regulatory authorities • Higher installation fee than competitors • Comparatively inferior broadband (to VM) The value chain analysis (Appendix A). All of these new features and services have established new opportunities for the group to expand its market share and attract more customers in the following years. cable operators. home and mobile broadband providers to entertainment products companies like betting and gaming companies. are set to launch new products into the market. which is a considerable growth comparing to 2009 that was only 59 million. demonstrates a deeper application of these strengths and weaknesses and demonstrates how they combine into the service and product offering. however VM limited availability and BT’s limited product offering reduce the likelihood of them overtaking BSkyB as the market leader. information. sports and entertainment. companies developing new technologies. in 2010. Apple and Boxxee Box have recently launched services on the basis of live streaming. they made available Sky Mobile TV App in November 2009. while Xbox. According to surveys. In addition. twice the number of watchers using HD free-to-air (Euro Consult 2010). This increase in competition and variety of service offering presents a challenge to BSkyB. telecommunications companies. digital and analogue terrestrial television providers. DTH providers. Furthermore. suppliers of news. 116 million European households were equipped with HD-enabled TVs and 170 million in 2013. In September 2009 the group launched Sky Songs. Google and YouView. Europe’s first 3D channel. Few months ago they launched the Sky TV mobile App for iPad and in October 2010 they introduced Sky 3D. The growth of established competitors such as VM and BT Vision remain visible threats. Threats BSkyB is engaged in a wide range of marketing competitions. an online music service offering access to over four million tracks for download and ad-free streaming. service providers making use of new fiber optic networks. Opportunities BSkyB has introduced new services during last few years. currently around 38 million users are taking advantage of HD pay-TV services. from competitions induced by companies involved in communications and entertainment services such as DSL providers. . There is another potential market growth in HDTV.
could have a material adverse effect on the group's business. taxation. gambling and taxation laws and regulations. It is also not certain that group will succeed in obtaining all requisite approvals and licenses in the future for its operations. They have to follow UK and European Union regulations. competition (antitrust). programming transmission and spectrum specifications. BSkyB operate in a highly regulated business environment. or other aspects of the group's business. or that of any of the group's competitors.The role of government is extremely relevant and remains a increasingly important factor. access requirements. Changes in regulations relating to one or more of licensing requirements. The regimes that affect the group's business include broadcasting. telecommunications. Change in these regulations limits the group’s flexibility and competitive abilities in the market. consumer protection. FIVE FORCES ANALYSIS 17 .
Supply-side economies of scale. .Threat of entry New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices. the threat of new entry is high and the existing competitor’s profitability is moderated. Therefore this is difficult for new entrants to establish a brand image like BSkyB at the beginning of their entrance. Also known as network effects. BSkyB has 9. since they can spread the fixed costs between more units. and the rate of investment necessary to compete. Demand-side benefits of scale. costs. The threat of entry in an industry depends on the height of entry barriers that are present and on the reaction entrants can expect from incumbents. which the average revenue per user is £508. As mentioned earlier. this could be said that customers are more or less satisfied with the brand. Barriers to entry 1. Therefore they own a large market share and by having larger volume of sale they can enjoy lower costs per unit. 2. BSkyB brand is well known and according to 10% churn rate.9 million subscribers. Thus new competitors need to come into the industry on a large scale in order to be successful. If it is low. which is decreasing each year. This is observed in industries which a buyer’s willingness to pay for a company’s product increases with the number of other buyers who patronise the company. the new entrants can expect little retaliation from the incumbents.
Customer switching costs. The group's Sky Talk relies on telecommunications services from BT. In broadband and home telephony sector. within its local loop unbundling (LLU) operations. Power of Buyers In this case buyers are families who love watching TV. backhaul circuits to connect that equipment to the group's network and finally individual copper lines that go between the central office equipment and the end user's house. Outside of the group's LLU areas it uses BT Wholesale's IP stream product to provide broadband connectivity to end-users. a BT group business. However. In addition. broadband and home telephony which the company provides have considerably high installation costs for customers. The group's dependence on BT will affect its operating performance and ability to service. telephony and network products and services. limiting quality or services. the group uses a series of products from Openreach. users have more opportunity to negotiate on the price since the same service is provided by other provided by different prices and options. These stipulate that the group buys these products on a fully equivalent basis when compared to other operators (including other parts of BT) who supply broadband. This usually includes fixed costs that customers have to pay when they want to change their suppliers. These are the collocation space and associated facilities to house the central office equipment. 19 . or shifting costs to industry participants. therefore it avoids them to easily decide to change the provider. All of the three. TV. since the service that BSkyB is providing is a unique service and people will find it difficult to find an equivalent service. the existing users have not too many options to choose from. if either Openreach or BT Wholesale fails to provide their offerings in timely and at reasonable cost. The group purchases these products from Openreach under terms and conditions outlined in legally binding undertakings given by BT and accepted by Ofcom. The group is dependent on British Telecom (BT) to conduct some of its business operations. and indeed the monthly charges is high enough to prevent major TV watchers to subscribe the service.3. The power of suppliers Powerful suppliers capture more of the value for themselves by charging higher prices.
UPC Broadband (a division of Liberty Global) and Boxer DTT. new product introductions. At this point BSkyB has a good position in the pay TV industry comparing its competitors but it still needs to convince more people to subscribe its broadband and home telephony service. It also faces competition from Virgin Media. Rivalry among existing competitors The group’s competitors include: British Broadcasting. advertising campaigns and service improvements by competitors can affect the groups market share. The threat of substitutes A substitute performs the same or a similar function as an industry’s product by a different means. and TG4. RTE Commercial Enterprises.In this industry the installation costs counts for a considerable amount of money for customers and each new provider wants to install its own equipments. For this industry the thread could be from Internet driven TV services. Channel 4 TV. less interruption and maybe less cost. British Telecom. Price discounting. Tiscali. Channel 5 Broadcasting. which have higher quality. . ITV. Therefore it makes it more difficult for the users to change their mind and change the provider.
all of which help shape the ever changing social needs and expectations of consumers. In addition to this further uncertainty will be added through the expected legislative changes the new coalition government introduce and the continued economic uncertainty and inconsistency. The pace of future changes will undoubtedly quicken as increasing attention is paid to new technology. it is apparent that both BSkyB and the markets it operates in have changed significantly over time. The future competitive environment is summarised through an applied five forces analysis (Porter 1980) in Appendix A.THE FUTURE OF BSKYB INTRODUCTION Having analysed the current position and performance of BSkyB. 21 . a trend which is set to continue into the future.
In addition to this. Sky has already increased its range of programs as part of a market development strategy (Ansoff 1957) with the inclusion of Sky Arts as part of a wider shift from a undifferentiated strategy to a differentiated strategy. yet Sky's core competency of developing and successfully implementing new technology has seen recording through the channel provider being referred to by many as “Sky plussing it”. and Ofcom's demand that Sky lower the rate it charges other providers for access to its' sports channels by 20% (The Telegraph). Sky has long been synonymous with sports coverage and in particular football. With this now a generic term. Sky must continue to invest in the latest technology and must plan the implementation of it. Virgin's Vbox and their 3D functions were launched before Sky's.TV CONTENT BSkyB main business is as a multi-channel TV provider and as such it is important to continue and develop the elements of this which have continually provided success. To prevent future legislation Sky must appear to be offering value for money to both Sky customers and other channel providers wanting to offer sports coverage. TECHNOLOGY We have already outlined how BSkyB’s performance throughout the 90's was largely dependent on this core offering channels and programs whether developed or purchased. The core product of the TV channels and programming require continued investment of both time and effort. Whilst programming remains important and central. it is referred to frequently which increases the status of the service and acts as an additional promoter of it. and it is this belief which has prompted the breakdown of sports coverage into packages (as opposed to a whole). Additional technology has seen the phased introduction of HD television and more recently 3D television. . Sky must continue to ensure that they have first access to the latest movies and biggest programs and series. SkyPlayer and video on demand functions. the augmentation of it is where the greatest innovation and therefore development can occur. The emergence of Virgin Media as a serious competitor and further competition from FreeView and BT (amongst others) have forced Sky to develop the periphery and augmentation of its products with the development of Sky+. Sky’s dominance of coverage has lead to many critics arguing that Sky has a monopoly over it.
Kotler and Anderson (2006) outline four key areas that have shaped the “digital age”. Digitalization and connectivity have been implemented through Sky+ and social networking. COMPETITION The industry is described as being “recession proof” (Mintel 2009). but the branding and quality of Sky+ mean that in the immediate future the Sky will not suffer a significant loss of customers.New technology is allowing smaller parties to link their services. The fourth element of the digital age is customization. as it is imperative that their service remains significantly superior (especially if a higher price is being charged). Despite not representing an immediate loss. will be powered by Tivo. this is an area of relative underperformance. and therefore further investment in the development of this specific area is needed. the creation and development of SkyPlayer is a clear indication of this. This results in an improvement in the standard of competition. Samsung have recently revealed a TV with the capability of adding apps as with mobile phones. Sky however faces new competition from YouView (which brings video on demand to a FreeView type service) and increased competition from Virgin. Intiatives such as the ECB's Coach Education Program have been supported by BSkyB. Introducing a greater degree of customization of packages and tailoring of pages on the Sky website or even adding tailoring to Sky+ could help customization drive BSkyB forward. CSR BSkyB have made efforts to increase its corporate social responsibility efforts. Skype and YouTube. A map of the competition in the market is shown in appendix B. The explosion of the internet and new intermediaries are somewhat interlinked and in relation to BSkyB’s activities. but the real value is added through the addition of Love Film. ITV and Channel 4 services as with the new YouView service. it does represent an area of future action for Sky. who has announced plans for an updated video on demand service that. which is how Sky and Virgin have been able to increase their customer base despite the introduction of the lower cost options of FreeView and Freesat. CSR efforts in 23 . and while some efforts have been made such as being able to select packages. This will allow the linkage of BBC.
ROLE OF GOVERNMENT With the new coalition government still in its infancy.5% increase will not be passed onto customers. and provide greater flexibility for them to operate. and reduces future legislation. projects such as the WWF project and BSkyB carbon reducing efforts. is part of a wider “cull of the quangos” (Osborne 2010). Similarly. the increase in subscription fees amidst the increased competition from lower continual cost options is far from ideal. . which improves the reputation and brand. elementary mistakes are still made as “Sky tend to treat regulators as an object to be bullied with intimidating legal tone” (Sabbagh 2010). The recent merger of the OFT and Competitions Commission. This needs to be changed so that where possible Sky work in unison with regulatory authorities and practice greater self-regulation to limit future detrimental law changes. presenting a competitive advantage. as shown by sporting governing bodies writing to Ofcom I support of Sky. In the new year the government will be increases VAT to 20% and although all of the 2. both BSkyB and Virgin Media are expected to increase prices. Conservatives has historically favoured a market led approach which would favour BskyB. and representative a liaise-afire government approach. whereas other providers who are dependent on program producers will not. Despite these efforts. help prevent and eliminate concerns over BskyB being an exploitative multinational organization. Although this report has stated that price is not a major factor if content and quality is good enough. they have yet to establish an apparent perception of BSkyB or approach to managing the media and markets. Longer term. the fact BSkyB produce their own shows and have established links with other program producers means that the probable eradication of the ban on product placement (Williams 2010). will create an extra revenue stream and allow Sky to control this.relation to the development of sport have helped offset concerns over BskyB’s monopoly of coverage.
BSkyB should be investing to further develop its' internet service and advertise the benefits of it. The percentage of the population in the 65-85 category looks set to increase further to approximately 20% of the population by 2034. 25 . to gather information from students at the University of Birmingham as they are soon to be young affluent customers. (Office For National Statistics 2010). We used a questionnaire (Appendix C).TARGETING AND SEGMENTATION Sky TV has been aimed at the mass market and efforts have been made to target an older audience in accordance with the demographic changes in the UK through having celebrities such as Helen Mirren and Parkinson. our research shows that the mobile phone element is not that important to this segment. it also shows that Sky is viewed as the best provider of TV channels but that Virgin is better provider of a “bundled” service. The research supports the suggestion that price is not paramount. In addition to this. however as Virgin Media has benefited from high-speed fibre optic. rather future custom will be dependent on new technology and in particular internet speed. Younger affluent customers make decisions based on a variety of factors. explaining the ease and benefits of technology such as Sky+. threfeore greater efforts have to be made to ensure that programming is appealing to this audience and that any new technology remains accessible to them. The government does have plans to increase the speed of internet in the UK which will enable Sky to improve its' internet speed. not just cost and at present they are not being accounted for (Mintel 2010).
htm [Date Accessed 01/12/2010] P. Anderson. 2010. Mintel 2009.imf. organisations from other markets are doing the same.html [Date Accessed 08/12/2010] IMF. services and brand name. an idea already supported by products. 2010. British Sky Broadcasting www.UK. should look to be the highest quality provider.com [Date Accessed 14/12/2010] Group plc. U. The key for the future is to continue to invest in developing new technology and continue to stress the high level of service they provide. 2010. Iss: 25. http://www. The future should be focused. [Date Accessed 11/12/2010] .com/documents/pdf/1ffb247d89b6490c9cd3dc7a4f24f4eb/report_09 [Date Accessed 20/11/2010] Datamonitor. a decision to try to compete on price would inevitably be detrimental. Ansoff. http://www. 2006. Further development into bundled services is important but only when it adds value to the core service of TV provision. Key Economics and Prospects to 2018. BSkyB is in a market which is facing substantial change.CONCLUSION Clearly. 2009. at Euro Consult 2010.euroconsult-ec. I. Irrespective of the current financial crisis. BSkyB.com/research-reports/digital-broadcasting-reports/hdtv-in-europe29-28. BSkyB Broadcasting Group.datamonitor. [Date Accessed 01/11/2010] BSkyB Broadcasting Group. Annual Report. Annual Report. Multichannel TV. London.K. Principles of Marketing.org/external/country/gbr/index. Harvard Business Review. The growth of HD and 3D can help maintain BSkyB’s position as market leader. BIBLIOGRAPHY H. pp113-115. as they diversify into new markets with new products. Pearson Education Inc. Marketing in the Digital Age.sky. HDTV in Europe. http://corporate. Strategies for Diversification. Kotler and G.
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