The real cost of SkyHD?

C

CAD

Guest
Does anybody know the true cost of broadcasting Sky HD? I dont mean marketing hype etc etc just the cost of the technology to get Sky HD to the masses. The reason I ask is because I have been reading the many discussion threads regarding the price of Sky HD with interest.

I probably like most folk here would agree that the Sky+ service is pretty good at the mo and at £42/ month it isnt too much wonga to part with.

But! Feel free to shoot me down if I am wrong but I do not agree with paying extra subscription charges for what is essentially just a few extra (repeated) channels (albeit with a great pic mind). I dont mind shelling out for the extra technology (the box), but why the extra subs?

I am sure there is some initial hardware investment on Skys behalf but like most busnisess we all need to keep up with progessing technology. Surely their present charge to the customer should be budgeting in future proofing. HD is
the future of TV and has been for a good while I guess, so why now will we all be asked to put our hands in our pockets again?

Please, somebody tell me that it costs millions to buy new transmitters, satellite bandwidth etc etc. I wont feel so bad then, when I look at the bank statement every month after signing up!!:D
 
I am sure that it will follow the same route as Sky+ - start off very high for both the box and an additional subscription fee and end up with the fee being waved if you have premium channels and the box coming down in price.

Why charge the subscription fee? Basically because people will pay it. When the service goes live I doubt that Sky will be expecting a mass migration over to the new system. Most peoples TVs still arent HD ready, a lot wont want to pay the £300+ for the box etc.... the economics probably work out that more revenue will be got by charging another £10 subscription fee and putting off 10% of your market but getting 90% paying them and the price of a box than getting 100% across to the new setup and only getting the price of the box.

I am not a technical expert to answer the other query about the changes that Sky will need to do and I doubt anyone outside of Sky truly knows if they are buying more bandwidth or if they are just stealing some from other SD channels etc.
 
I think sky will charge another £10 plus charge for box as well, lets not forget SKY are as cunning as a fox with a law degree.:D
 
Astaroth

Astaroth said:
I am sure that it will follow the same route as Sky+ - start off very high for both the box and an additional subscription fee and end up with the fee being waved if you have premium channels and the box coming down in price.
QUOTE]

I hope you are right about that. Dont mind waiting six months or so before I sign up to HD. I honestly beleive that if you are already paying for the premium channels then you really shouldnt have to pay any more. After all you should be paying for the content of the channels you recieve not the picture quality. If Sky can broadcast the HD signal at no real extra cost then they should by default.
 
Sky make their money from subscriptions. It's very likely that, after the first flush of expensive boxes, they will be sold off at cost, or even subsidised, as the other boxes tend to be.

Subscriptions = Income.

It's unavoidable.

Jerry
 
There is a huge extra cost to Sky and the other broadcasters. Since existing Sky boxes can't down-convert, Sky (and other broadcasters) have to broadcast both HD and SD versions of programmes (or the ones that will be available in HD, anyway), and the HD versions take up 3 to 4 times the bandwidth of the SD versions. Add to that the cost of other equipment like mixing consoles and cameras, and the cost of developing and producing the HD boxes, it's a big outlay.
 
I guess if you need 3/4 times the amout of satellite bandwidth then the ongoing cost will increase. But will it not be the case like Astaroth pointed out that the extra bandwidth will be 'borrowed' from other SD channels such as QVC and the like....

Sorry if anyone works for QVC no offense intended
 
CAD said:
I guess if you need 3/4 times the amout of satellite bandwidth then the ongoing cost will increase. But will it not be the case like Astaroth pointed out that the extra bandwidth will be 'borrowed' from other SD channels such as QVC and the like....

Sorry if anyone works for QVC no offense intended




SKY are using three transponders they leased from SES last year (as reported by SKY and SES) for their HD services. Remember that since SKY do not own any satellites virtually all the third party channels on the SKY paltform deal direct with SES or Eutelsat, SKY can not nick anyone elses bandwidth:)

As for thier own it's far more reasonable to assume that reducing bandwidth for SKY's own SD channels will lose them far more money then exta HD subscription will ever bring in.
 
Cheers for clearing that one up Stardust. It would be interesting though to see an exact breakdown of where my £42 quid goes though. I get the feeling that any extra money I will be paying for HD, the bulk of it will not be on the extra transmission costs.
 
CAD said:
Cheers for clearing that one up Stardust. It would be interesting though to see an exact breakdown of where my £42 quid goes though. I get the feeling that any extra money I will be paying for HD, the bulk of it will not be on the extra transmission costs.

Since Sky is a PLC, the breakdown of their profit & loss sheets is in the public domain - you can see them here
 
CAD said:
Cheers for clearing that one up Stardust. It would be interesting though to see an exact breakdown of where my £42 quid goes though. I get the feeling that any extra money I will be paying for HD, the bulk of it will not be on the extra transmission costs.




Yeah make no bones about it the introduction of HD is all about creating a new revenue stream and providing another service which will help maintain SKY's presence in the UK market.

SKY will make a profit from the initial 12 month HD contract but like all companies the initial investment will be met by the business as a whole so it's probably impossible to break down exactly where the HD sub actually goes:)

As Nick_UK says the basics are covered in the AGM reports which show exactly how much money goes to buy movies, sports or pay for the third party broadcasters. To get that info broken down even further may need far greater access to SKY accounts the we could ever get:)
 
Sky pays around 4million euros a year for a transponder lease from SES the owner of the Astra satellites. They would need 2 transponders for 10 HD channels(Ipressume they will continue to add channels), this will cost them 5.5m pounds. Thus they would need about 50,000 HD subscribers to break-even on the broadcasting costs. Don't forget some of that £10 or whatever a month will be going to Gordon Brown in VAT.

There will be some modest increase in costs of equipment and for production but they can cover all these costs with a small number of subscribers.

The real costs at Sky are programming and Subscriber Acquisition Costs. Sky paid £391m for football in 2005, 10% of revenues. They paid £747m for sports programming. This was almost 50% of al programming costs. Basically 25% of what we pay to Sky goes straight into the pockets of footballers and the like. This number is expected to continue to rise.

The next largest cost at Sky is marketing £515m last year. When everyne is phoning them up getting a free Sky+ and so on if they threaten to cancel, don't forget that the rest of us are paying for that. Every new Sky subscriber costs £431 in marketing, box subsidies and the like. This is known as the cost per gross add. The cost per net new subscriber added is over £1000. i.e. they spent £500m+ last year to add around 450,000 subscribers.

Sky is a nicely profitable business, it has a roughly 20% operating margin. However the stock has actually performed quite poorly recently. The reason for this is that investors are worried that margins fall as competition with BT, Freeview, cable etc increases the costs to acquire and keep subscribers. Of course this is another way of saying falling prices in the future.

To summarise the bulk of your £42 goes to Sol Campbell's 100k a week and persuading people who aren't Sky subscribers to become new subs. HD could make them a nice profit and if they can make one they will. However, the real game in this business is gaining and keeping subscribers and in the long run they need HD to show they have a better product than their competition. This means subscribers don't leave and they save the £1000 it costs to get each new one.
 
Most TV shops I've been in recently are mainly selling panels. If they thought that people were going to leave HD alone for a few years I'd have expected to still see plenty of CRT TVs still for sale.

If Sky want people like me who only recently spent £1500 on a panel to get in at the start of HD then they are going to have to be sensible about the cost of the new box and any subscription.

I shall be haggling furiously when they start selling. My story line will be that I'm moving into an address served by Telewest in a couple of months and I'll be taking up their service unless Sky and give me a deal.
 
The cost of the new SKY HD box will not be, as mentioned earlier, around the £700 mark, but more likely £299 (+ £9.99 monthly subscription in addition to the normal subscription).

_http://ukhdtv.net/news/hdtv/exclusive:_sky_hd_pricing.html
 
Cupart said:
Sorry... Didn't see it when reading through the other posts

No worries mate, its just getting too repetitive and people are now getting desperate for HD;)
 
I really feel for the folk that are not footy fans! The thought that I was giving almost 50% of my subscription to kit out premiership players in bad suits must be hard to stomach. I am a football fan so it is a price that I am forced to accept:mad: But I guess ranting on about how sky are destroying english football is a discussion best saved for another time.

Cheers for all your posts, has been an eye opener:thumbsup:
 
I just don't understand what the big deal is with the whole HD business? We did fine with the good old analogue transmissions and the move to digital was a small revolution. Sat TV has only been around (meaning propper DTH) for what (?) 10-15 years with no or little change the first decade. Then came digital. We got more channels to choose from and the picture quality got much better. I'm more than happy with the SD quality we have today and feel that the HD story is being hyped and taken a little too far. It's basically an add-on to the SD and not the giant step from analogue to digital. Don't hope that too many get dissapointed when it arrives. PS. I haven't seen any HD transmissions, so I can't comment on the quality...

av2diefor, I agree on the annoying repetion of posts...
 
I totally agree with you on the whole Cupart. I to am pretty happy with the SD picture I watch day to day. Where I am hoping HD comes into its own is during the transmission of sporting events and action movies. At the mo I feel these are a bit of a let down when viewed on a biggish screen - say 42".
 
Cupart said:
Ha ha ha... You must be joking



Think about it for a minute.....


Lots of HD coverage of the beautiful British country side with well dressed gentry and stately homes, fine fillies their flesh glistening in the summer sunshine and then there are the horses:D
 
We need to remember that HD isn't new technolgy.
A number of countries have been enjoying it for a number of years and much of the technology is now mature.
I've seen a 50" Panasonic being demo'd in HD via a very small sat receiver about half the size of your average SKY box.

However, it will be sold as new technology here in the UK and some of us who already have purchsed compatible displays will find it hard to resist.
 
Hodman said:
We need to remember that HD isn't new technolgy.
A number of countries have been enjoying it for a number of years and much of the technology is now mature.
I've seen a 50" Panasonic being demo'd in HD via a very small sat receiver about half the size of your average SKY box.

However, it will be sold as new technology here in the UK and some of us who already have purchsed compatible displays will find it hard to resist.


I feel the same way, this is one of the best threads ive read regarding this issue. its both informative and interesting. im getting a bit fed up of the...it is gonna cost xxx amount of ££££ 's. Its nice to read a more intelligent debate about the thinking and politics behind sky..and how they are gonna justify whatever they charge eventually.

The second an official anouncement is made..i know it will be on the forums. i have recently spent about £4,500 grand on my set up....it always makes me laugh when people spend that type of money on av set ups.then moan on how to get the best from them (e,g calibration and HD sources .... which as we all know is made up only of PC stuff and suedo HD (upscaling) at the moment.

I like everyone else...on one hand will resist sky HD with all my mite.....but on the other hand will say..ive got to have it first...warts and all. just to utilise my beloved av system which i have...like others have invested so much time and money. after all isnt this the reason i am writing this.. and youve bothered to take the time and read it?.

i suppose this is a good time to praise the forums and honestly say...ive have saved so much money by being a member of my beloved forum. theres probably not a day goes by that i dont "Tune into the debate" and offer my own opinion, and educate myself on all matters AV, although im not as technical or experienced as the av gurus, such as...Maw, Gizarloc, Joe Fernand, Gordon from Convergent, Piers to name but a few (sorry if i missed you) the list goes on and on. And the moderaters and prominant members like Horny Dragon who has a post tally, which has to be the holy Grail of this forum.

Every bug to be found on this forum regarding av equipment has been solved, addressed or a workaround provided(as much as is humanly possible, as the forums cant be responsible for dodgy hardware in the first place !!!). the information if you read closely or carry out searches (which a lot of people seem to neglect before starting a new thread these days ) covers everything. because we are all sharing info and experiences.. im not saying i dont visit other sites....but you would be hard pushed to find a better run or informative site.

sorry for the rant all, and not staying to thread, but someone had to say it, so it might as well be me!!!!!!!!


Thanks Av Forums for Everything !!!!:clap: :clap: :thumbsup:
 

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