plusworld.co.uk - the unofficial home for the world of sky+

Big Issue

This Week - The £10 Charge - by Callum MacFarlane

Posted on Saturday, 20th July at 17:00 BST

WHAT HAS THE SKY+ £10 CHARGE EVER DONE FOR US?

Since Plusworld.co.uk went live the no. 1 issue in the Discussion Forum re. The Plusworld feature: "The Sky+ Top 10 Issues" has been the objection to the £10 monthly subscription charge for Sky+.

Also in the last week a sneak preview has emerged of what features are coming to Sky+ in the next few months as part of their promised ongoing development of the Sky+ product.

Frankly, I am reminded of a scene from the movie, "Life of Brian." If you haven't seen it, you should rent it. It's the best clean laugh you'll find, courtesy of Monty Python. A room full of discontents is sitting around talking about how terrible it is to be occupied by the Romans. (Apologies to Mr Python for the following re-working…)

FRANCIS: We're gettin' in through the underground heating system here, up through into the main audience chamber here, and Sky’s Subscriber Centre is here. Having grabbed our files, we inform Sky that their records are in our custody and forthwith issue our demands. Any questions?
COMMANDO XERXES: What exactly are the demands?
REG: We're giving Sky two days to dismantle the entire apparatus of the Capitalist Imperialist State, and if they don't agree immediately, we terminate our contracts…
MATTHIAS: Cut their easy money off?
FRANCIS: Cut all their bits off. Send 'em back our digiboxes on the hour every hour. Show them we're not to be trifled with.
REG: Also we're demanding a ten pound customer refund for every month we’ve suffered this terrible "money for old rope" charge..

P.F.J.: laughing
LORETTA: What? They'll never agree to that, Reg.
REG: That's just a bar... a bargaining counter. And of course, we point out that they bear full responsibility when we throw our Sky+ boxes out of the window, and that we shall not submit to blackmail!

COMMANDOS: No blackmail!
REG: They've bled us white, the bastards. They've taken everything we had, and not just from us, from our fathers, and from our fathers' fathers.
LORETTA: And from our fathers' fathers' fathers.
REG: Yeah.
LORETTA: And from our fathers' fathers' fathers' fathers.
REG: Yeah. All right, Stan. Don't labour the point. And what have they ever given us in return for our £10 a month?!
XERXES: The affordable PTR
REG: What?
XERXES: The Personal Television Recorder
REG: Oh. Yeah, yeah. They did give us that. Uh, that's true. Yeah.
COMMANDO #3: And the Recording of two programmes on different channels at the same time
LORETTA: Oh, yeah, the Recording of two programmes on different channels at the same time, Reg. Remember what the evenings used to be like?
REG: Yeah. All right. I'll grant you the affordable Personal Televison Recorder and the Dual Recording are two things that the Sky+ £10 charge has done.
MATTHIAS: And the ability to watch recorded programmes while recording two programmes…
REG: Well, yeah. Obviously the ability to watch stuff already recorded, I mean, the watching recordings things go without saying, don't they? But apart from the affordable Personal Television Recorder, Dual Recordings , & the ability to watch recorded programmes while recording two programmes…
COMMANDO: Set up repeat recordings for when there’s no Series Links
XERXES: 30 speed reverse and fast forward
COMMANDOS: Huh? Heh? Huh...
COMMANDO #2: Record radio programmes
COMMANDOS: Ohh...
REG: Yeah, yeah. All right. Fair enough.
COMMANDO #1: And the software updates
COMMANDOS: Oh, yes. Yeah...
FRANCIS: Yeah. Yeah, that's something we'd really miss, Reg, if the Sky folk left. Huh.
COMMANDO: Public commitment to ongoing product development of Sky+.
LORETTA: And it's safe to walk in the streets at night now, Reg. Knowing that Sky+ is improving all the time and happily recording all your stuff at home
FRANCIS: Yeah, they certainly know how to keep order. Let's face it. They're the only ones who could in a place like this.
COMMANDOS: Hehh, heh. Heh heh heh heh heh heh heh.
REG: All right, but apart from the affordable Personal Television Recorder, Recording two programmes on different channels at the same time, the ability to watch recorded programmes while recording two programmes, Setting up repeat recordings for when there’s no Series Links, 30 speed reverse and fast forward, Recording radio programmes, Software Updates and a Public commitment to ongoing product development of Sky+, what has the Sky £10 charge ever done for us?
XERXES: Brought peace.

REG: Oh. Peace? Shut up!
------ THE END ------

And of course they were right. Who in their right minds would want to pay £10 for ever more? Who would sign up for an everlasting commitment whether the service was good, bad or indifferent? Who would choose to fill the coffers of BskyB and make them rich?

That will be Sky+ subscribers then.

In an ideal world, the £10 monthly charges we incur would either be:

* non-existent

* payments for a set period of time

* or a lifetime subscription to cover Sky’s costs

But of course, this isn’t Utopia and we are paying £10 every month for as long as we want the Sky+ service. But what exactly is the Sky+ service?

If we stopped paying £10 a month would the hard disk fall out of the recorder, would series links disappear? Would live pause not pause and would recordings fail to play? Of course not. It could all still work for "free". But don’t try it – because it doesn’t.

Because of course Sky don’t want you to use Sky+ for free so they have designed the system so that if you decide to unsubscribe from the Sky+ service then the big silver thing under your TV will become as about as much use as a knitted monkey.

So why have Sky taken this single-minded approach to Sky+? The answer lies in the past and the future.

In the past, the biggest question and complaint made to Sky was – why can’t we watch 1 Sky channel whilst we record another on our VCR. Sky had no answer, there service worked well but it was not equipped to do the thing that most subscribers wanted it to do.

Fast forward to Autumn 1998 – and the Digibox – the satellite receiver set top box that made UKGold watchable. (remember the sparklies pre digital?) All this quality picture but still no dual record / watch facility. So around the same time developments were put in place to produce a system that met consumers needs.

Producing a twin tuner receiver though simple produced some conundrums:

1) The LNB / dish would need replaced
2) How do people select the channel to record?
3) Where is the profit stream from this idea?

When Sky looked at those issues, they knew a subscription for any worthwhile amount wasn’t going to be possible, the costs of LNB replacement, engineer time wouldn’t create profit, and giving people fancy new EPG options to change one of the tuners would be baffling to many folk, oh and they’d still need to find a suitable video tape.

No, what was needed was a bold, futuristic, forward thinking, dynamic, flexible product that would cement the foundation of the mid-long term future of BskyB.

Step forward the key players:

* Sky Digital – the drivers of the whole Sky+ project

* NDS provided "The Integrated Personal TV Solution" called XTV which is an end-to-end content delivery, management, and protection system.

* Pace prototyped, built and tested the hardware,

* OpenTV provided the interactive solutions

* and NEC supplied hardware components

The ideology behind the product was most simple – give the customer a device so powerful that they will never give it up. The catch being of course that this power comes at a price.

* £300 for a Sky+ box

* £50 installation charge.

* £10 per month forever

Everyone would agree that these are not inconsiderable amounts of money for the consumer. However on the reverse side - the costs associated with Sky+ are:

* Initial Research & Development - Hardware & software

* Manufacturing cost of the Sky+ system - the consumer price is less than the cost to build a Sky+ system.

* Ongoing Research & Development for software updates.

The actual cost to build a Sky+ system is a closely guarded commercial secret, however, looking at the launch date of the product and seeing how much a similar device would cost in the US or Europe - you would not get change from £700 for a non subscription hard disk video recorder with similar features.

So the question from Sky's perspective must have been two fold?

1) How many people would buy Sky+ at £700 per machine

2) How much revenue and profit would Sky make from Sky+ at £700 per machine in a non-subscription environment.

Of course, as our American friends might say "this is a no brainer". The answers to the questions are simple

1) Not many people would fork out £700 for a Sky+ box with no tied subscription

2) Revenue would be severely limited due to small uptake and profit potential would be minimal.

So what to do then with "a killer application" that would become Sky+. And that's where the business planning comes in. Call them what you like, the suits, the management, the board…it all boils down to the same thing - business models and what the market would bear.

After careful consideration and market testing one business model rose out of the primeval Sky+ soup…and that was the £300 charge with £10 a month subscription.

The hardware cost is largely academic - Sky has never made money on the hardware it supplies and was not about to start now. A loss leader in selling the Sky+ box was not a concern either way. Besides due to future large-scale production of the Sky+ box, actual unit costs would reduce over time anyway.

No the real eye opener for Sky was the maths….

In this world of "maximum revenue per subscriber" Sky knew they couldn't get much higher than £35 per month. Rupert Murdoch himself was heard to remark exactly this comment on the recent BBC4 programme that screened last month, "Inside the Murdoch Dynasty".

However given a "value added service" like Sky+ and the revenue possibilities really begin to add up:

We shall take as the base line figure 5 million direct to home subscribers each paying on average £30 per month (estimated).

Total revenue from Direct To Home subscribers = £1.8 billion .

With the value added element of Sky+ the figures look like this:

At year one 30000 Sky+ units sold, subscriber revenue of £10 per month generates £3.6 million

At year three 500000 Sky+ units sold = £60 million

At year five with a push to get as many as half the subscribers converted to Sky+ the additional revenue per year would = £300 million PER YEAR !

So going back to the original point:

Why is there a charge of £10 per month for Sky+?

There are "300 million" reasons why there is a charge!

Sky is a business and businesses are out to maximise revenue growth and maximise profit.

Don't expect the £10 charge to disappear soon, or ever.

Do expect the relentless push to get Sky+ in as many homes as possible.

Sky are now paying Pace, the manufacturers of Sky+ an unknown percentage of the £10 monthly fee for a year (as reported here) and maybe they will do this again to continue growth. Why pay full price for hardware upfront when the long-term gains to be made from £10 per month are so fantastic?

Remember the introduce a friend to Sky scheme and Sky will pay you some money?

Expect similar schemes in the future for Sky+.

Expect special promotional offers £100 off Sky+ when you buy anything from an electrical retailer. (these have already started)

Expect Sky+ half price for a promotional period only.

And by Year 5 of the plan, expect that all new digiboxes will be Sky+ !!

After all if you're willing to sell Sky+ in an electrical store for an effective £200 charge - then giving it away free would only take 20 months to recoup before subscriber revenue of £10 a month brought Sky back to profit.

And of course Sky will be thinking long term.

So is the future of Sky+ bright? You bet.

Is the £10 charge here to stay? You bet (though Sky may drop the £10 charge as a separate charge and introduce packages like Sky+World for £45 per month, that loses that Sky+ standalone figure of £10 on your Sky statement but fully incorporates the £10 charge into a newly named package)

Will Sky look after the golden goose that lays £300 million a year (in year 5)?

You bet.

The revenue stream demonstrated here is so compulsive and overwhelming in its ability to generate revenue, and profit, that Sky+ will continue to break moulds and bring out new improved software that meets its customers needs because Sky so badly needs Sky+ to be a success.

This is one golden goose that will never stop laying eggs.

If you're a Sky+ subscriber and you think that £10 a month is unfair, then you should take on-board the points mentioned and if you still feel the same then consider ending your subscription.

But for the rest of us the £10 charge will continue the improvement in the capabilities of Sky+ and should hopefully enable Sky to put some resources into serious Sky+ customer care, which is currently not very visible. Sky can afford to treat Sky+ owners as VIPs - it’s one of the tasks of Plusworld to make sure that they start doing so.

If we don’t feel we’re being treated that way, it’s up to all of us to say something.

And here’s a message to all those malcontents out there unhappy at the £10 monthly charge for Sky+…As Brian himself sang when he was being crucified : "Always look on the bright side of life….."

Always look on the bright side of life.

[whistling]

Always look on the light side of life.

[whistling]

If a tenner a month seems jolly rotten,

There's something you've forgotten,

And that's to laugh and smile and dance and sing.

When you're feeling in the dumps,

Don't phone Sky you silly chumps.

Just purse your lips and whistle. That's the thing.

And...

Always look on the bright side of life.

[whistling]

Always look on the right side of life,

[whistling]

For the charge is quite absurd

And Sky have got the final word.

You must always face the curtain with a bow.

Forget about their sin.

Give the audience a grin.

Enjoy it. It's your last chance, anyhow.

So,...

Always look on the bright side of death,

[whistling]

Just before you saw your terminal wealth.

[whistling]

Ten pound’s a piece of shit,

When you look at it.

Life's a laugh and death's a joke. It's true.

You'll see it's all a show.

Which you’ve recorded before you go.

Just remember that the last laugh is on you.

And...

Always look on the bright side of life.

[whistling]

Always look on the right side of life.

[whistling]

Always look on the bright side of life!

[whistling]

© (All original sketches, pictures,and lyrics are the property of Python (Monty) Pictures, Ltd., all rights reserved.)

If you agree or disagree with this article - we would like to hear what you think. Please click here to go to the relevent thread in the Digital Spy Sky+ Discussion Forum.

Other subjects featured in the Big Issue:
Dual Recording	Series Links	Sky+ Customer care

This site uses frames. Click here if you don't see directory buttons on left.