Sky alerted subscribers this week that prices could rise by up to 10 per cent on September 1, 2013, but what can we really expect?
This is no time for Sky to scare off its customers, as BT prepares to launch the biggest assault on Sky’s dominance of British pay-TV since the launch of Virgin Media in 2006.
When Sky announced its September price rises in June 2012, there was no coyness about what was changing, so what does ‘up to 10 per cent’ mean, and why aren't they being up-front this time?
In our opinion, it’s a way of saying that prices will go up by small amounts, satisfying Sky’s legal requirement to give 31 days’ notice, without tipping off BT, Virgin and TalkTalk.
These increases also come on the back of a double whammy in September and December last year, when Sky caught up on a long price freeze.
New customers have limited protection
Subscribers who have been with Sky for less than 12 months have some protection from price increases, as detailed in your contract.
The bad news is that Sky can increase the cost of your Premium channels - Movies and Sports - as much and as often as it wants.
The good news is that it can only increase other charges once during the minimum term and not at all during the first 60 days (it’ll change on day 61 instead).
Non-premium price increases are also limited to 10 per cent, or the annual increase in the UK Retail Price Index, whichever is greater.
Sky Entertainment packs
#1: Sky Entertainment & Entertainment Extra +£1Sky’s price structure already looks very different compared to September 2012: the Entertainment Extra+ package has reorganised the basic packages.
The lower packages were raised by £1.50 last year, but they still include on-demand for older subscribers, so they’re a pretty good deal.
#2: Sky HD Pack +£0.50Raising them again will make the top package, with its inclusive HD channels, an attractive option - especially if the HD boost also gets more expensive.
Recombu Digital’s 1st Sky price prediction: Sky Entertainment and Entertainment Extra to go up by £1, to £22.50/month and £27.50/month. No change to Entertainment Extra+.
Recombu Digital’s 2nd Sky price prediction: HD Pack to go up by 50p, to £11/month for Entertainment and Entertainment Extra packs, £5.75/month for Movies and Sports.
The arrival of Sky’s five bundles has brought a level of complication to Sky’s tariffs which is out of character. If they’re popular, we could see the end of the Entertainment packs altogether in 2014.
Sky Premium packs
#3: No increase for Sky Sports & Sky MoviesSky faces competition for both film and sports customers unlike anything it’s seen before.
For all Sky’s bluster, BT has made a long-term commitment to sports, while Netflix and Lovefilm are aggressively challenging for both film and TV viewers.
This hits Sky from both directions: it’s paying more to keep film and sports on its channels, while it needs to be competitive to hang on to viewers facing the squeeze of Austerity Britain.
The underwhelming success of Now TV (Sky’s no longer reporting user numbers separately from its TV channels, suggesting it has nothing to celebrate) demonstrates that these are very price-sensitive markets.
Recombu Digital’s 3rd Sky price prediction: No increases for Sky Movies or Sky Sports
Sky Broadband and Phone
#4: Sky line rental +£0.50Britain has a very competitive broadband and phone sector, and Sky has always competed as much on price as its package.
Broadband bundles are a key battlefield in the war for subscribers, and Sky’s already offering heavy discounts for TV subscribers who switch to Sky for broadband as well.
#5: No increase for Sky BroadbandThe best room to manoeuvre is in line rental, where BT and TalkTalk still look expensive.
Recombu Digital’s 4th Sky price prediction: Sky line rental to increase by 50p to £15/month.
Recombu Digital’s 5th Sky price prediction: No increases for Sky Broadband or phone costs.
Multiroom and Sky Go Extra: Milking the minted
#6: Sky Multiroom +£0.50One place Sky can do a bit of squeezing is in an area where it has a near-monopoly: Multiroom and Sky Go Extra.
We’ve always thought Sky Multiroom was over-priced, but it’s a luxury service where the users are probably comfortable with a small price increase.
Recombu Digital’s 6th Sky price prediction: Sky Multiroom up 50p to £10.75/month.
#7: Sky Go Extra +£0.50Sky Go Extra’s closest rival is Virgin TV Anywhere, but it doesn’t allow downloads, and this is another piece of luxury for high-end telly addicts with cash in their pockets.
Recombu Digital’s 7th Sky price prediction: Sky Go Extra up 50p to £5.50/month.
Full disclosure: Recombu performs commercial work for Sky, but we are not privy to details of forthcoming price rises. All predictions in this feature are based on the writer's 14 years of experience covering the UK digital TV industry.