Sky adds users in UK as aggregation strategy begins to bear fruit

Sky has doubled down on content aggregation being key to its strategy as it saw a solid quarter in the UK.

The company confirmed that Sky saw a “significant sequential improvement in direct-to-consumer revenue” but saw net losses of 21,000 customer relationships across TV, broadband and mobile across the entire group. This loss however is an improvement over Q2 2020, where it saw net losses of 214,000 users.

In spite of a downward trend in Italy and Germany, the company added 51,000 net customers in the UK, with chief financial officer Mike Cavanagh attributing this growth to “the return of sports and a healthy underlying trend in the UK,” along with “our strategy to be the best TV aggregation platform in the market.”

In an increasingly streaming-oriented viewing landscape, aggregation is becoming an increasingly vital differentiator for Sky. The company earlier this year launched a £25 bundle of its basic package and Netflix, while it also announced a high-profile distribution deal with Disney+ in March.

Using the example of Disney+, Sky CEO Jeremy Darroch, said that the company has taken “a very high fixed cost long-term contract, and effectively turned it into an app – we’ve taken that cost out of our P&L and they’re getting a margin by selling Disney+ through Sky.”

The shift to focusing on aggregation for Comcast for its Xfinity operation in the US and Sky in the UK, Darroch said, “can complement the user experience very much and get a much more flexible and more valuable set of cost structures.”

OTT offer Now TV, Cavanagh said, “is positioned for a different market segment,” but its ARPU is increasing and customers are subscribing to more packs on average. The CFO noted that the quarter saw “a 60% increase in the uptake of our highest price sports pack.”

Cavanagh also said that Sky in the UK saw “record low TV churn” and “continued growth in streaming broadband and mobile customers.”

Sky Q also continues to grow in penetration, with 58% of UK Sky households now having the set-top-box – up 13% year-over-year. Overall Sky Q penetration is at 51% of households across the UK, Italy and Germany.

The continental European markets were described by Cavanagh as “a bit more challenged.” He said that there was a “positive customer response” to pricing changes in Germany, while Italy “continues to be impacted by a tough macro environment.” The exec also noted “positive momentum” in Italy following the June launch of Sky WiFi – its broadband offer for the country.