Sky navigates the consumer crisis
Revenue decline accelerated in Q2 as the cost-of-living crisis appears to be impacting UK sales, but profits remained strong thanks to last summer’s Continental sports rights reset.
In Italy, DAZN will return on Sky’s platform just in time for the new Serie A football season, filling a key gap in its aggregation strategy.
Looking forward, thanks to its enhanced profitability, Sky has the flexibility to respond to the economic downturn using pricing and content.
Related reports
- Under a revised deal, DAZN, the Serie A broadcaster, is now allowed to expand its distribution to the Sky platform in return for a reduced fee from TIM, the incumbent telco
- The new-look Italian market is consistent with DAZN’s approach elsewhere in Europe, seeking blanket distribution and avoiding head on challenges with incumbents
- For the Italian sports rights market, the agreements clear the air, but Serie A needs deep reform
Sky continued to grow its UK revenue thanks to price rises, mobile customer additions, and a rebound from lost hospitality business in early 2021, but this was still outweighed by the recent reset of its Italian operation.
Aggregation remains a core focus, with Paramount+, and Magenta Sport in Germany, added to Sky’s bundles, while fibre rollout will intensify with the launch of Sky Stream puck as a standalone device later this year.
Declining buying power raises uncertainty over consumer behaviour: in previous recessions, pay-TV performed well, but today subscribers have more video options than ever before.
Sky post-COVID: Strong recovery in the UK, rest to follow?
16 February 2022Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.
The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.
In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.
Sky: Sports rights reset, Glass launches
10 November 2021Sky has started to reap benefits from its substantial reduction in sports rights costs in Italy and Germany, helping to grow group EBITDA by 76% in Q3, despite a slight drop in revenue.
With this change in strategy, the business model in Italy is undergoing an upheaval. Meanwhile, the UK continues to perform well, with further promise on the horizon thanks to the bold launch of Sky Glass.
This streaming TV is a future-proofing leap forwards in Sky’s ever-more-central aggregation strategy, starting the business down the long path to retiring satellite, though this is probably still over a decade away.
Sky v.2.0: Aggregation, originals and fibre
14 May 2021After a strong post-pandemic rebound, Sky has the opportunity to leverage its strong reputation with consumers to meet the challenge posed by new competitors and the studios’ direct-to-consumer transition, establishing Sky Q as the ultimate gatekeeper of video subscription homes.
Sports rights costs in Germany and Italy have been cut significantly, while Sky’s spend on UK Premier League rights will decrease in real terms. Savings will ease the financing of the shift to original content, which, associated with owner Comcast’s NBCU output, anchors the aggregation strategy.
Fibre deployment in the UK and Italy presents a subscriber and revenue growth opportunity, and underpins the gradual shift away from satellite to online content distribution.
- Under a revised deal, DAZN, the Serie A broadcaster, is now allowed to expand its distribution to the Sky platform in return for a reduced fee from TIM, the incumbent telco
- The new-look Italian market is consistent with DAZN’s approach elsewhere in Europe, seeking blanket distribution and avoiding head on challenges with incumbents
- For the Italian sports rights market, the agreements clear the air, but Serie A needs deep reform
Sky continued to grow its UK revenue thanks to price rises, mobile customer additions, and a rebound from lost hospitality business in early 2021, but this was still outweighed by the recent reset of its Italian operation.
Aggregation remains a core focus, with Paramount+, and Magenta Sport in Germany, added to Sky’s bundles, while fibre rollout will intensify with the launch of Sky Stream puck as a standalone device later this year.
Declining buying power raises uncertainty over consumer behaviour: in previous recessions, pay-TV performed well, but today subscribers have more video options than ever before.
Sky post-COVID: Strong recovery in the UK, rest to follow?
16 February 2022Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.
The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.
In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.
Sky: Sports rights reset, Glass launches
10 November 2021Sky has started to reap benefits from its substantial reduction in sports rights costs in Italy and Germany, helping to grow group EBITDA by 76% in Q3, despite a slight drop in revenue.
With this change in strategy, the business model in Italy is undergoing an upheaval. Meanwhile, the UK continues to perform well, with further promise on the horizon thanks to the bold launch of Sky Glass.
This streaming TV is a future-proofing leap forwards in Sky’s ever-more-central aggregation strategy, starting the business down the long path to retiring satellite, though this is probably still over a decade away.
Sky v.2.0: Aggregation, originals and fibre
14 May 2021After a strong post-pandemic rebound, Sky has the opportunity to leverage its strong reputation with consumers to meet the challenge posed by new competitors and the studios’ direct-to-consumer transition, establishing Sky Q as the ultimate gatekeeper of video subscription homes.
Sports rights costs in Germany and Italy have been cut significantly, while Sky’s spend on UK Premier League rights will decrease in real terms. Savings will ease the financing of the shift to original content, which, associated with owner Comcast’s NBCU output, anchors the aggregation strategy.
Fibre deployment in the UK and Italy presents a subscriber and revenue growth opportunity, and underpins the gradual shift away from satellite to online content distribution.