Sky HD take up slows

Sky's latest quarterly results are published today; predictably good (but not outstanding) and still on target for their "10 million by 2010". Full press release here.
One thing that caught my eye was that there were 33,000 Sky HD customers added last quarter. That's somewhat disappointing if you look at it as a proportion of the total number of Sky customers: HD now being available to half a million of Sky's customers, just 5% of their total base. Okay, 41% of Sky customers have Sky +, but the HD take up appears to have stuttered.
Considering the marketing push behind their HD services, that's pretty surprising. Maybe the price cut will improve Sky's HD take up. Maybe it'll pick up with the new footie season. But maybe it's going to remain a niche product in these credit crunching times.
(Curiously, 11% of Virgin Media's customers have HD through the V+ according to the last published results, and that proportion should increase further when they release newer figures in August. Of course the customer base is smaller, but it makes you think. Unless your name's Neil Berkett, of course...)
Incidentally, Sky's ad revenues were again impacted by the lack of Sky basics on Virgin Media and Sky CEO Jeremy Darroch said this when asked about them returning to VM:

"Our view hasn't changed. We'd like to get our channels back on Virgin. It's cost us money in terms of advertising and wholesale, and I'm afraid that is the power of a closed network, so we can't do that unless they agree. If we can get to sensible terms we'll try to but it's still up in the air."

Virgin said "Discussions are still ongoing."

The Value of High Definition Services

The blog’s latest poll demonstrates the predicament over HD; almost half of the respondents said that they would not be prepared to shell out an extra £10 a month for more high definition services. 45% (of 284 voters) said they wouldn’t pay for the Sky HD channels, and given that this blog is pretty much preaching to the HD converted, that really does ask a question regarding the financial benefit to a company like Virgin Media of High Definition services today.
Admittedly the HD channels from Sky aren’t compulsive viewing for everyone, but last month’s poll had Sky Sports HD as the most wanted channels on cable, so I’m somewhat surprised by this month’s vote. For an extra £10 a month, Sky HD subscribers get two sports and movies HD channels, Sky One, National Geographic, History Channel, Discovery, Sky Arts and Channel 4. Is that worth £10 a month? Only 155 of you thought that was worth £120 a year – so what do VM do?
I think the vast majority of Virgin customers will be satisfied (for now) with the HD versions of the main broadcasters’ flagships; BBC, ITV, C4 and Five. Throw in a high definition Film4 or Five US, all for free, and we’d be very happy bunnies indeed. What’s more, I think envious Sky HD customers would be demanding the reduction or elimination of their monthly bills, too – check out some of the Sky HD forums over on Digital Spy.
The truth is that HD, fabulous though it is, is still very much of minority appeal in the UK. This ain’t the States, where the SD picture is almost unwatchable and the average TV is approximately the width of a terraced house – the SD on a V+ of a higher bitrate channel is exceptionally good on the average UK LCD. It’s not high-end home cinema, but it is sufficiently HD-enough for the average family.
That may not be comfortable reading for the HD aficionado (who is unlikely to be a Virgin customer out of choice anyway) but is pretty much the reality. For Virgin, an HD offering matching FreeSat’s basics when it launches later this year will probably be sufficient to keep the vast majority of its customer base happy, especially given the current V+’s limits with storing Mpeg2 HD programming. VM’s latest customer figures are due to be revealed any day now – the increase in V+ subscribers will be primarily down to the PVR functionality rather than HD capability. And I strongly suspect Virgin’s HD offering will be limited in its expansion in 2008, and for the foreseeable future. C’est la vie.

Ten predictions for 2008

A little late, but here are some quick predictions for what we can expect on the HD front from Virgin Media this year:

1. Channel 4 HD finally makes an appearance on cable Probably in the spring. Forums instantly flooded by the same people who had complained about it not turning up at launch in December, now complaining about the lack of genuine HD on the channel
2. ITV HD not on Virgin Media at launch I hope I'm wrong, but I suspect that it will be a late show on cable, especially if Sky retains its stake in ITV. Again, forums flooded with complaints about the lack of HD content on the new HD channel, many realising that ITV actually broadcasts mainly rubbish these days
   
3. VOD HD grows in fits and spurts 4OD HD content sneaks out but at 99p a pop for the US imports. As the Hollywood writers' strike hits hard, there's very little new available
4. BBC HD expands, but "events" take precedent over regular programming Kicks off as a genuine channel only with the launch of FreeSat.Throughout the summer the channel is dominated by Wimbledon, Glastonbury, the Proms, the Olympics, leaving little time for other programming. Things pick up in the autumn, but it's a long wait
   
5. HD remains a niche product I think this will be true for both VM and Sky customers. The V+'s upscaling of SD is so good that for those without a TV 40" or bigger there'll be no great demand. Sky's pricing will drop but it will still prove prohibitive to the average viewer. HD versions of FX and a few more movie channels appear on the platform
   
6. Sky HD will be impacted by FreeSat I don't think it will hit Virgin as hard as it will Sky. People who want HD, have a dish but don't fancy the Sky charges will opt for the Beeb-promoted "free" alternative for the main channels in HD (check out the Sky HD forums - lots of posts from people unhappy with the reliability of the Sky boxes and HD programming)
   
7. Sky One and the basics return Wishful thinking? Not really, but it matters to many and the impasse will end because ...
   
8. OFCOM report hits Sky...and Virgin Neither side happy with the findings from OFCOM into the pay TV market. Nothing of any real substance comes out but it does broker the return of the Sky basics to cable...but not in HD
9. Tiscali TV and BT Vision struggle IP TV fails to make the grade; the former will be sold at a knock down price, the latter will remain a minor player
10. Blu-Ray will become the new DVD HD standard But will still remain a niche product for the home consumer. Players will start to sell in larger numbers, but Recorders will be prohibitively priced. HD-DVD will die a fairly quick death without the support of the film studios
    

New poll: what next?

Whilst we're waiting for C4 HD, here's a bit of fun - what would be the next HD channel you'd like to see on Virgin Media? (I've deliberately missed off Sky One as that would probably be a landslide winner!) Give it some thought and please vote - poll will close at the end of January.

Sky HD bugs

Wary that the other man's grass is often of a greener hue, I've been checking out a few Digital spy threads on the Sky HD offering. Check this out Sky HD bugs - 38 pages and counting, lots more bugs than I'd thought. I know the V+ box ain't perfect (I've had a recording fail this weekend) but it sounds like Sky customers have it even worse. Of course, Sky HD has 250k customers compared with VM's 120k (figures from the last numbers released by both companies) so the correspondence on Sky HD will be more voluminous, but then VM don't charge you £10 a month for the service either.