Last week, Sky unveiled a "fairer" way of setting the costs of subscription rates for pub customers with discounts on offer for those with a sizeable food trade or outdoor areas. Sky Business's managing director explains the thinking behind the new system
Much has been written this past week about Sky's decision to change the way it sets commercial subscriptions.
As we might have expected, some have been keen to express their concerns in the face of increases to rateable value (RV) and Sky's underlying price rise — our first in three years. This disquiet is understandable. Business is tough, pubs are having to work harder than ever to attract punters, and no one likes a price rise, whatever the justification.
But we live in a commercial world and Sky is unable to freeze its prices indefinitely. Our costs are increasing too, and this year alone we'll spend more than £1bn on Sky Sports, to continue to offer an exceptional product. I have to charge a price I believe to be both fair and economically viable for customers. The onus on me is to get this right. Sky and its customers have a shared interest in finding a pricing model that enables us all to make a return.
So in attempting to address fairness concerns, and to try to counter the criticism that the banded RV system was a bit of a blunt instrument, we've now introduced a pricing mechanism which I believe better matches subscriptions to the value they offer individual premises.
Having moved away from the rather unwieldy RV bands, the reality is that in addition to those that are set to pay more — either due to a
significant increase in their RV, or because they had previously benefitted from the inflexibility of the
banding system — many thousands of pubs will actually see a price decrease, but understandably they haven't been so vocal.
Value
I accept that some customers will believe Sky should be cheaper, or that live sports doesn't drive as much value for them as it may do others. Fortunately every business has a free choice about whether to subscribe, based on an economic assessment of the worth of live sports.
But for the many, not the few, I believe Sky is good for business. More fans than ever are watching live sports in pubs — in fact, around 10 million a week. Like you, I want that number to grow, as I do the number of pubs who offer Sky. It comes back to the mutual benefit of finding a fair pricing model that works for both parties.
And I believe we're moving in the right direction. The changes we've made to our pricing mechanism reflect a number of changes we have seen occur in the industry over recent years, such as the move to offer more food or entertainment experiences. This is now reflected in how we set our prices, which many customers and industry groups have welcomed, albeit privately.
By offering discounts based on food and outside space, as well as transitional relief on RV increases, I actually believe we've made some really significant steps forward. What's more, we intend to introduce discounts based on accommodation and are looking at further discounts to better reflect the value Sky holds for each individual premises. Headline price increases will continue to, well, make headlines, but I ask that customers reflect on the longer-term implications of setting individual prices and discounts which reflect the truth worth of Sky.
We've also taken meaningful steps to help pubs up the ante in terms of delivering a first-class in pub live sports experience. We've made HD and a second viewing card free on a permanent basis, Sky Sports News will exclusively form part of the Sky package from next month, and we will continue with our groundbreaking 3D channel next year.
Innovation
More than 1 million customers have already watched live 3D sports in pubs, following less than a dozen live fixtures.
From the new season we'll ramp up our 3D output and, crucially for pubs, continue to offer exclusive content not available to residential Sky 3D customers, so there will continue to be a tangible difference between what's available at home, and what you'll find at the pub.
And Sky 3D will continue to be available without any additional subscription. All we ask is for your creativity and energy in working with us to help with the marketing and PR we need to really make 3D fly.
Rest assured, throughout our pricing review we have consulted, debated and reviewed with the industry and will continue to do so. We'll keep reviewing and amending our pricing structures. This is only the start of a journey.
Let me stress: we believe Sky should be affordable to all pubs who would see value in offering live sport, and if and when a pub chooses to subscribe, to price accordingly. That's why are engaging with the industry with the aim of better matching the cost of our product to the value individual customers can realise from it.