Sky Comms Chief Answers Critics

A bigger hard drive for MySky HDi and HD movies on demand are “under consideration”, says Sky TV’s communications czar, Tony O’Brien.

ScreenScribe.tv invited the satcaster’s public relations boss to state the company’s position after he challenged some of my comments about it in a February 7 interview with Radio NZ National’s Mediawatch presenter Colin Peacock.

As well as explaining Sky TV’s HD strategy, he confirmed several improvements to Sky’s service were being contemplated, including expanding the storage capacity of MySky HDi.

It’s currently limited to about 160GB, because the remaining 160GB has been sectioned off for pay-per-view downloads.

While O’Brien wouldn’t comment on how – or when — the extra hard drive space would be delivered to subscribers, the upgrade will have to be a priority if Sky opts to offer HD movies over its Sky Box Office service.

But he did respond to quizzing about why Sky seemingly was SD-obsessed rather than HD-driven in its channel launches, the latest being yet another lifestyle-lite option, the Travel Channel, from May 1, and, from June, TVNZ Heartland, which has euphemistically been dubbed a “Kiwi Gold” channel because of its wall-to-wall re-runs of shows from the broadcaster’s vaults.

It seems movies and sports will remain Sky’s HD priorities in the short term, with the rights costs of major sports events squeezing the programming budget for alternative HD content.

To learn more, read on …

What were your concerns about the Mediawatch discussion on HD services in NZ?

Sky’s aim is to ensure that any information disseminated by third parties about the company, and its products and services, is fair and balanced. As we discussed, some assumptions were made during the broadcast that were not correct.

How would you describe the speed of Sky’s HD roll-out to date?

Excellent – the service launched in July 2008 – there are now more than to 144,000 MySky HDi units in the field, approximately 18% of our subscriber base, plus four HD and three free-to-air channels available to subscribers.

Do you not think subscribers who have invested in a MySky HDi, an HD Ticket sub and a Full-HD display, on the basis they would be able to access a suite of HD content, might be disappointed that Sky plans to add SD channels at the expense of HD channels?

MySky HDi has completely changed the way we watch television – more than 144,000 My Sky HDi customers seem to agree.

Consumers began purchasing HD televisions several years before the launch of HD – it is not correct to assume that they all purchased a HD television just for Sky.

Notwithstanding the fact that an “HD Ready” television produces a better quality picture, than the analogue version, consumers can also watch HDTV on several other platforms, including Blu-ray, online via a PC, and on Freeview.

One HD channel occupies the same space as four SD channels. MySky HDi subscribers are not just interested in HD – subscribers also want variety and choice in the content that is available on Sky.

In the short term, until compression techniques improve and/or bandwidth costs reduce, we are constantly faced with same dilemma – getting the balance right to gain new subscribers.

HD channels that are not compelling are not going to drive subscription – quality, choice and variety will.

Sky CEO John Fellet recently said Sky won’t add HD channels this year. Why are HD subscribers being asked to wait at least two-and-half years from MySky HDi’s launch to access more than a handful of HD channels (four subscription channels, three FTA) when Foxtel and other broadcasters are adding HD channels much quicker?

Over the last 24 months, Sky invested heavily in studio and broadcast infrastructure to enable the delivery of HD services throughout New Zealand. This has made a real impact on our company financials without any return on the investment until HD is adopted by a significant percentage of subscribers.

However, this is an investment in the future and we can live with it.

The key issue that drives the growth of HD is HDTV penetration – it is a balance between the availability of content, the number of HDTVs, consumer demand and infrastructure.

The faster that we can increase HD subscriber numbers, the sooner that we will reach a break-even point and the best way to do this is to add more content.

In New Zealand, Sky currently broadcasts more HD channels than any other broadcaster – seven HD DTH [direct to home] channels. Sky has plans to increase the number of SD and HD channels – we will announce this at the appropriate time.

Foxtel may be adding HD channels yet they are not adding HD subscribers as quickly as Sky. The real issue is that quality programming-content drives subscription take up.

Why can’t Sky offer exclusive channels to HD subscribers? Why should HD subscribers have their choice limited by Sky wanting to simulcast its HD channels in SD?

We would not want to limit the availability of content to HD subscribers only. Sky has to simulcast HD channels in SD until we reach a point where the majority of subscribers have MySky HDi. Imagine telling more than 650,000 Sky customers that they can’t watch Sky’s Sport and Movie channels any more as they are now only available in HD.

Experience in other countries has shown that the take-up of HD is lower if viewers don’t know that the SD channel they are watching is also available in HD.

Couldn’t Sky whet interest in HD upgrades by offering some channels that are HD only? Why not start by offering Sky Box Office HD downloads?

Sky Box Office HD downloads is currently under consideration.

What are the challenges Sky faces in providing HD in a market like NZ?

The key issue that drives the growth of HD is HDTV penetration – it is a balance between the availability of content, the number of HD TVs, consumer demand and infrastructure.

The additional cost of bandwidth and carriage, the availability and cost of HD content are major challenges.

How does Sky decide which TV channels it will launch? Is the research based on focus groups, what’s popular on other pay-TV platforms, cost …?

Quantitative, qualitative and focus group research, viewership projections, international experience gained from BSkyB and Foxtel, and cost.

What restrictions are there on the number and variety of TV channels Sky can offer?

Bandwidth, carriage costs and availability.

Which channels are most requested by subscribers — and are there any that Sky can’t offer here for licensing, cost or other reasons?

Prior to launching in 1990, Sky carried out research to determine what people wanted to see on television – people said that they wanted to see nature, news and documentary programmes.

In 1990, Sky launched a three-channel analogue service and increased the variety and number of channels through the launch of digital via satellite in 1998.

However, the reality is that subscribers still primarily watched sports and movies channels.

Sky can’t offer channels/programmes that are already licensed to third parties.

With eight sport channels, subscribers see Sky as the home of New Zealand sport. Over the last twelve months Sky purchased of the rights for the 2010 and the 2012 Olympic Games, the Commonwealth Games and the Rugby World Cup 2011.

These and other rights purchases make the allocation of the programming budget even more challenging.

What feedback has Sky had to its HD service from subscribers? Has it all been positive? If there have been complaints, what have they concerned?

Positive, with the exception of some disappointment when we expect to get a sports event in HD and it is shown in SD.

During 2009, the majority of New Zealand-originated sport events were in HD. This included the Super 14, All Black Rugby Tests, the Air New Zealand Cup, NRL rugby league, transTasman netball, cricket, football and local sport shows.

Our goal is to broadcast as much international sport as possible in HD; however, unlike New Zealand, where Sky is already broadcasting in HD, we have to rely on an international broadcaster to film the event in HD.

Even when the event is filmed in HD, sometimes the world feed that is provided to us is only in SD.

The good news is that as more and more people around the world take the HD service, we move closer and closer to a position where all event feeds will only be in HD.

MySky HDi has completely changed the way we watch television.

When will Sky launch a MySky HDi with a much larger hard drive than the 320GB model?

This is currently under consideration – we are looking at alternatives within our current STB [set-top box] to provide greater capacity.

How much of the current hard drive can be used for recording and how much is sectioned off for downloads?

The customer can use 50% – we use the remainder to provide our OnDemand VOD service.

Why can’t subscribers use the USB connection on their MySky HDi to archive content to an external drive?

This project is currently under consideration – please note that digital rights management restrictions are placed on us by the content providers, which prevents connection to a non-proprietary hard drive.

Any other observations?

We need to deliver what content customers want to see, when they want it and where they want to see it – getting this right is our key focus.