BSkyB fought back against intensifying competition yesterday by launching a ï¿½10 TV box allowing viewers to watch on-demand services.
The broadcaster unveiled the budget Now TV box, which can also give access to Sky Sports and Sky Movies, as it revealed a 12% jump in the number of products its customers take.
Subscriptions rose 3.3m to 31.6m in the year to the end of June, lifting pre-tax profits 6% to ï¿½1.26bn, as customers increasingly add products including broadband, HD TV and Sky Go Extra.
Sky hailed a strong summer of sport, which has seen it broadcast Ashes cricket and Lions rugby, as well as Team Sky cyclist Chris Froome’s Tour de France win.
Sky is battling surging competition from rivals including BT, which launches its own sport channels on Thursday, in a head-on challenge to Sky’s dominance of pay-TV sport. BT’s channels will be free to its broadband subscribers and give viewers 38 Premier League football games a season.
Sky’s Now TV box costs ï¿½9.99 and wirelessly connects a TV to a broadband connection, giving contract-free access to BBC iPlayer, Demand 5, Sky News and Now TV. Through Now TV, viewers can also pay to watch Sky Sports and Sky Movies.
The device also allows people to catch up on previously-broadcast programmes – known as on-demand TV.
The Now TV device will also challenge the ï¿½299 YouView box, a joint venture between BT, TalkTalk, the BBC, ITV, Channel 4, Channel 5 and Arqiva which also offers on-demand TV for free.
Sky said 35% of its customers are now taking TV, broadband and phone services, up from 32% last year. That helped grow revenues 7% to ï¿½7.24bn.
But its churn rate – how many customers are leaving – increased to 10.9% from 9.9%. Sky warned that it expects the year ahead to be challenging as consumer spending remains squeezed.
It also announced plans to buy back ï¿½500m of shares to boost investor earnings.
Customer numbers were up 4%, or 552,000, to 14.8 million, of whom 11.2 million were retail customers. Average revenues per user climbed ï¿½29 to ï¿½577 a year.
Chief executive Jeremy Darroch said: “We expect the consumer environment to remain challenging over the coming 12 months.
“We have a strong set of plans that will extend our leadership in core areas – on-screen, in-home communications and in front-line service delivery; accelerate growth in new services; and improve efficiency to build a bigger, more profitable business for shareholders.”
Sky said it is expanding its Sky Go mobile TV service with another 10 channels and adding 20 to its catch-up service and upgrading its TV boxes to hold more content.