Sky added 242,000 new customers in the quarter ending 31 March - close to 70% more additions than the same quarter of 2013. In its second quarterly set of results as a pan-European operator spanning five countries, Sky said it sold one million products and reported its strongest Q1 in the UK and Ireland in 11 years.
In the three months since December 2014, total customers in the UK and Ireland increased by 1.08% to 11,877,000. This was a 4% increase on Q1 2014, and encompasses Sky’s entire product offering, including subscription OTT (over-the-top) TV service Now TV. The operator reported year-on-year growth of 30% for its Now TV service, which suggests it has been a key driver. At the end of the quarter, the total products taken by Sky’s British and Irish customers stood at 37,315,000, which implies approximately 3.14 products per customer, an increase on the 2.98 ratio in Q1 2014.
Sky also saw improvements in its total customer base in its other territories. In Germany and Austria, the operator added 102,000 subscribers in the quarter, bringing the total to 4,225,000 (up 13.2% on the previous year). In Italy, the signs of customer turnaround seen in Q4 2014 continued, with subscribers increasing by 12,000 in the quarter. However, this was still 0.1% lower than the previous year, which the operator stated owes to challenging economic conditions.
Revenues across Sky’s five territories for the nine months ending March 2015 increased 5% to £8,453 million (€10,475 million). For the first quarter of 2015, this was £2,849 million (€3,530 million), up 5.4% on the revenue figure for Q1 2014, if all Sky’s European operations are accounted for. Splitting this out by territory, it can be seen that much of the growth was driven by the UK and Germany. In the UK, revenue for the quarter increased by 7.4% to £1,993 million (€2,470 million), and in Germany revenue was up 8.5% to £343 million (€425 million).
While Sky does not currently split out subscribers for each of its services following the combination of its domestic and European businesses, the positive effect of Sky’s dual strategy with fixed and online services on its customer base can be surmised from its results. In addition to the growth of Now TV, which included a trebling in sports transactions to over one million, Sky has increased its base of connected boxes in the UK to close to 7 million. This resulted in on-demand downloads increasing 63% year-on-year to 300 million during the quarter. Sky’s strategy of pushing connected services is being implemented in Italy and Germany also, albeit with varying degrees of progress. Sky has stated that 32% of its Italian customers have connected boxes, and it is due to roll out connected boxes in Germany this quarter. In addition, Sky launched an IPTV service in Italy together with Telecom Italia last week, which will provide a further boost to its online presence in Italy.
However, despite the growth reported for both revenue and subscribers, ARPU progress has remained steady across Sky’s territories. In its UK and Irish markets, ARPU increased to £47 (€58.24) from £46 (€57) the previous year, and remained flat at €43 in the Italian market. While the intake of customers in Germany compared to the previous year has been sharp, revenue growth from monthly subscription services seems not to have matched this, with ARPU down from €36 in Q1 2014 to €35 in Q1 2015.