LONDON — Europe’s biggest paybox, BSkyB, is facing a “perfect storm” of an imminent U.K. recession, rapidly changing technology and tighter regulation that are all combining to threaten the satcaster.
This is according to a report from investment banker Collins Stewart, which warns that BSkyB may miss its target of signing up 10 million subscribers in the U.K. by 2010.
“We believe BSkyB faces greater threats to its business model than ever before,” said the report. “Recession, technology shift and regulation could together combine to make the perfect storm.”
If as forecast by a separate analysis, published Tuesday by market research combo Continental Research, auds pay less for subscription packages, BSkyB’s average revenue per user (ARPU) will dip.
BSkyB, which publishes its latest set of quarterly figures next week, declined to comment.
But an insider at the paybox said the company’s business model was “resilient” because, unlike British terrestrial webs ITV and Channel 4, which are funded entirely by advertising, only 10% of its revenue comes from ad coin.
Nonetheless, BSkyB’s stock price has fallen to a 10-year low with shares at one point trading at £3.50 ($5.75) Thursday.
With Ofcom scrutinizing BSkyB’s dominance of the U.K. pay TV market, tighter regulation of the sector may be in the cards.
BSkyB traditionally sets the pace when it comes to new home entertainment technologies in the U.K., leading the way with Sky HD and personal video recorder service Sky +.
But Collins Stewart reckons broadband-delivered video-on-demand offers also pose a threat to the satcaster.
“As Internet VOD services develop and faster broadband penetration grows, it is difficult to see how Sky’s movies offering will be regarded as a key reason to subscribe to Sky,” it said.