Satellite giant BSkyB to offer pay-as-you-go access to its sports channels for the first time, as it reports a rise in pre-tax profits
BSkyB will for the first time allow customers to watch its sports channels on a pay-as-you go basis for £9.99 a day, the first time it has ever allowed access to prime content such as Premier League football without a Sky TV subscription.
The move is a radical departure for the company, which has spent the last 20 years using prime sports such as Premier League football to convince viewers to sign up for monthly packages of at least £42.50.
BSkyB is to offer sports fans the option of watching unlimited sports content from all six of its sports channels on its new internet TV service, Now TV, for a 24-hour period for £9.99.
BSkyB aims to build the popularity of Now TV, which launched with Sky Movies content in July, which it revealed has attracted 25,000 subscribers in the three months to the end of December.
The new sports offering will launch in the spring and aims to attract fans looking to watch a one-off event, such as a Formula One grand prix, England cricket match or Masters golf.
Jeremy Darroch, the BSkyB chief executive, said that the new service will not cannibalise Sky's solid "gold" revenue stream of monthly Sky Sports subscribers.
"It will complement [subscription packages] well, it a way to extend Sky Movies, Sky Sports and later entertainment channels to an entirely new set of customers," he said.
BSkyB has previously said that Now TV will target the 13m non-pay TV households, such as Freeview customers, that may want to "dip inand dip out" of its programming.
"We think that a day pass is going to be attractive," he said, dismissing claims that it may be too pricey. "We think it will work well alongside Sky Sports."
BSkyB said that it was starting to see real traction with its on-demand and mobile services in general.
The average number of weekly downloads of on-demand shows – including catchup TV via the BBC iPlayer, ITV Player and Demand Five on Sky's platform – more than doubled within the last quarter alone from 1.8m to 4.4m. Sky content accounted for more than 50% of downloads.
Sky Go, which allows existing Sky TV subscribers to watch programming on mobile devices, saw unique user numbers rise 46% year on year in the final quarter to 3.1m. Sky said its biggest success was An Idiot Abroad which attracted 850,000 on-demand views across the series. The most popular show viewed via Sky Go devices was last December's Manchester Premier League derby, which drew 234,000 unique users.
BSkyB revealed the initiative as its traditional TV subscriber service continues to show minimal growth, just 25,000 new customers signed up in the three months to the end of December. BSkyB has 10.33m TV customers.
The company, which reported six-monthly pre-tax profits up 7.5% to £642m to 31 December, beat most analyst expectations, adding 132,000 broadband customers in the quarter to 31 December.
Consensus City estimates put broadband sign-up numbers at closer to 117,000. BSkyB has 4.2m broadband customers.
The number of customers taking high definition TV rose 93,000 to 4.56m of its total customer base.
A third of BSkyB customers now take a "triple play" of three services such as TV, broadband and line rental.
Revenue rose 5% to £3.5bn in the six months to the end of December, with Sky pushing its interim dividend up 20% year on year to 11p.
Average revenue per user, a key metric monitored by analysts, rose £24 year on year to £568. Churn rose slightly from 9.6% at 31 December 2011 to 10.3% at the end of last year.
BSkyB also moved to strengthen its entertainment content striking an exclusive multi-year deal with Sony Pictures Television for films such as Men in Black 3, The Amazing Spiderman and Quentin Tarantino's Django Unchained.
It is the third major deal BSkyB has made with a "big six" Hollywood studio in recent months, as it continues to look to shut out rivals including Netflix and Amazon's Lovefilm in what is referred to as the first pay subscription window in which they compete.
In November BSkyB struck a similar deal with Universal, and in September reached an agreement with Warner Bros. BSkyB still has ongoing deals in place with the other major studios Disney, Paramount and 20th Century Fox.
BSkyB's programming costs increased by £113m, 10% year on year, to £1.22bn. Sports accounted for £48m of the increase, mainly due to Formula One and Ryder Cup rights and two cricket tours.
BSkyB also outline plans for the launch of a new targeted advertising system, called AdSmart, this summer.
The service will allow the company to target TV ads to Sky households at a "hyperlocal" level, potentially to the point of being able to offer tailored versions of commercials to individual postcodes. At the moment TV ad campaigns on Sky can only be targeted at an almost a blanket national level.
Sky's chief finance officer, Andrew Griffith, said that AdSmart will only target Sky households on an opt-in basis and that it would not use any data that was not available in other industries, such as for running direct mail campaigns, or of a level that is used by information firms such as Experian and Kantar.
"Consumer privacy is fundamentally important to us," said Griffith. "it is not about seeing more ads, it is about taking ad profiling [on TV] to the next level."
BSkyB sees an opportunity to break into the local TV advertising market, offering competitive rates for, for instance, florists who cannot traditionally afford commercials to pay a cheaper price to target just customers near them.
The service looks set to be aiming for the same advertising market as the 19 local TV licences that Ofcom is in the process of awarding to bidders.
BSkyB will be able to deliver the ads to customers with its Sky+ HD service, which currently number about 7.3 million.
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