Stephen van Rooyen Chief Executive Officer - UK & ROI - Amazon S3
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Stephen van Rooyen Chief Executive Officer – UK & ROI The Jungle Book
This document contains certain forward looking statements with respect to the Group’s financial condition, results of operations and business, and our strategy,
plans and objectives for the Group. These statements include, without limitation, those that express forecasts, expectations and projections, such as forecasts,
expectations and projections in relation to new products and services, the potential for growth of free-to-air and pay television, fixed line telephony, broadband and
bandwidth requirements, advertising growth, DTH and OTT customer growth, On Demand, NOW TV, Sky Go, Sky Go Extra, Sky+ HD, Sky Q, Sky Store, Sky Online, mobile,
Multiscreen and other services penetration, revenue, administration costs and other costs, advertising growth, churn, profit, cash flow, products and our broadband
network footprint, content, wholesale, marketing, synergies and integration, and capital expenditure.
These statements (and all other forward-looking statements contained in this document) are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the Group's control, are difficult to predict and could cause actual results to differ materially from those
expressed or implied or forecast in the forward-looking statements. These factors include, but are not limited to, the fact that the Group operates in a highly
competitive environment and faces competition from a broad range of organisations, the effects of laws and government regulation upon the Group's activities, the
fact that the Group’s business is based on a subscription model and its future success relies on building long-term relationships with its customers, its reliance on a
complex technical infrastructure which is subject to risk of failure, change and development, failure of key suppliers, the Group’s exposure to financial market risks, the
fact that the Group must protect its customer and corporate data and prevent breaches of security, risks inherent in the implementation of large-scale capital
expenditure projects, the fact that the Group relies on intellectual property and proprietary rights which may not be adequately protected under current laws or
which may be subject to unauthorised use and the fact that people at Sky are critical to the Group’s ability to meet the needs of its customers and achieve its goals
as a business.
Information on the significant risks and uncertainties is provided in the “Principal risks and uncertainties” section of Sky’s Annual Report for the full year ended 30
June 2016. Copies of the Annual Report are available from the Sky plc web page at www.sky.com/corporate and in hard copy from the Company Secretary, Sky plc,
Grant Way, Isleworth, Middlesex TW7 5QD. All forward looking statements in this document are based on information known to the Group on the date hereof. The
Group undertakes no obligation publicly to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
2
• Sky UK&I has a track record of leading change in Europe’s most dynamic market
• We have the right building blocks to maintain our position as market leader
• We are an incredible market challenger, and will continue to enter new markets
successfully
3
4
TV & Telecoms market in top European countries
€49bn
€39bn
Telecoms 29 €30bn
25 €24bn
€19bn
19
16
TV 20 14
14 11 1.5
8 5
2.0
TV households 27m 42m 28m 25m 18m
Per household spend €1,815 €929 €1,071 €960 €1,056
Source: TV market Ampere (includes pay TV and Advertsing), Telecoms Ofcom 5
Youtube Setanta
Virgin Amazon
Sky Digital ITV Digital Freeview Talk Talk Media Freesat ESPN Netflix BT Sport Instant
Video
BBC
Lovefilm iPlayer
1998 2001 2002 2003 2006 2007 2008 2010 2012 2013 2014
Launch of Sky ITV Digital Freeview Talk Talk NTL and Setanta Freesat ESPN Netflix BT Sport Amazon
Digital and ITV launches founded Telewest launches launches launches in launches launches Instant
Sport merge to Premier the UK in the UK with Video
launches form Virgin League With Premier launches
games
Media Premier League
BBC iPlayer League games
Youtube launches games
launches
LoveFilm
grows
6
Penetration of select video media hardware, UK, 2007-2016
Broadband penetration
Smartphone
Tablet
Connected games console
Smart TV
TV streaming device
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Ofcom, GfK, IHS, Ampere Analysis, Mediabug, Now TV Tech Tracker, Statista, SPG modelling 7
Year Product Achievement
2001 Sky+ Highest penetrated PVR
2006 Sky HD Created HD market
Sky Go UK’s first OTT service
2012 On Demand Most used On Demand service
NOW TV Highest penetrated smart device
2016 Sky Q Best TV Viewing experience
NOW TV Combo First No Contract triple play
8
Mobile TV Sky+ app 3D Sky Store Sky Go Extra Sky+ UI Fibre Virtual Reality
Interactive Sky Player Sky Anytime Sky Go Catch up TV NOW TV Box Sky Adsmart Sky Advance Sky Kids
streaming launches
Sky+ Sky+ HD Broadband On demand NOW TV Box sets Buy and Keep NOW TV Sky Q
hybrid box
1999-2004 2005-2007 2007-2009 2010-2012 2011-2012 2013 2014 2015 2016
Product Service
Technology Infrastructure
Development capability
9
Customers (millions) Products (millions) Revenue (billions)
12.4 40.4
12.0 38.0 £8.4
11.5 34.8
£7.8
11.2 31.6
£7.4
10.6 28.4 £7.0
£6.6
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
10Proportion of time spent watching by type
2% 2% 2%
8% 5% 3% 2%
Online clips 14% 6%
3%
12% 12%
7% 9%
13%
DVD / Blu-ray 6%
7%
6% 17%
Paid on demand
7% 20%
21%
16%
Free on demand 13%
Recorded 12% 82% 83%
67%
55%
50%
36%
Live
16-24 35-44 65+
Source: Ofcom/GfK – Digital Day 2014, Aug, Base: Adults 16+ (1,644); and Digital Day 2016, Base: Adults 16+ (1,512) 1112
1. 2. 3. 4. 5.
The The best The The Serve the
Number 1 and most broadest greatest TV whole
in Sport complete range and viewing market
movies highest experience
service in quality
the world basic
content
13The biggest and broadest offer in market today
Football Golf Motorsport Cricket And more…
14SHOW SKY Q IDRIS ADVERT
SHOW SKY SPORTS PROMO
15We have the winning model to lead in sport
• Depth and breadth creates optionality
• Rights acquisition experience coupled with data and analytics
• Rolling rights provide certainty and control
• Diversified monetisation of rights
• Rights are not a zero sum game when you have scale
• Consumers consider the price of sports in the round
Barclays Premier League
16Sky Sports is the leading broadcaster, and is expanding its reach
Sky Sports is rated well ahead of our Sky Sports continues to grow its reach
competitors on key metrics across all platforms
Individual Reach
73%
+42%
Sky Aug 14 Aug 16
Leading broadcaster of my favourite sports
Source: Sky Sports customers
Sky Sports Reach – based on Unique users of Sky Sports websites / channels 17More Choice, More Flexibility, Highest Quality, Great Value
A Premiere a Day Over 1,200 Movies on Demand Home of Franchises
18SHOW SKY Q IDRIS ADVERT
SHOW SKY CINEMA PROMO
19Sky Cinema is still growing – over 20 years after launch
Sky Cinema Subscribers
+7%
• Business continuing to grow
4 hrs
28 min
• Biggest movies service in Europe
• Combination of product and content
innovation delivering enhanced value
for our customers
2013 2014 2015 2016
20Sky’s basic channel portfolio provides something for everyone
For just
The home of fresh, The home of World-class, cinematic The home of
£20
exhilarating family utterly intriguing and immersive story- music, arts and
entertainment drama telling culture
50+
per month
First for breaking news Keeping you up to date with Sport for everyone
the latest sporting news
21Sky’s original productions provide us with flexibility and are reaching scale
Flexibility Scale
50+
Creative Marketing Growth As many Original Series
as Netflix pa
Source: As many original series as Netflix pa based on scripted and unscripted series, per THR research, Sept 2016 22Sky offers unrivalled choice from a range of partners
Long-term partnerships in place
New series added
every month
High quality scripted General Documentaries Kids
drama and comedy entertainment and Nature
new pay exclusive series
per month from Sky &
partner channels
23SHOW SKY Q IDRIS ADVERT
SHOW ENTS PROMO
24We have built a winning model
Market Leading User Interface
Market leading Quality
Market Leading TV
Market Leading Anywhere
On Demand Library The Market leading
connected PVR
25We have repeatedly delivered the best TV viewing experience
Sky+ Sky+ HD NOW TV Sky Q
Best subscription T3
Streaming Best Buy Best Buy 2016
PVR Best Buy Service of 2014 2015
2005 2014
the Year
2016
Best Set-top Box &
Best set-top Box Subscription PVR
2013, 2014 & 2015
Best Buy 2016
2015
No. 1 gadget
2003
26Sky Q is the next-generation home entertainment system
• Bringing popular services to the living room
• Your favourite content on every device and every TV in your home
• Faster and easier to find content you love
• Connected experience &
best wifi coverage
• Professionally installed
27SHOW SKY Q TAKE RECORDINGS
WITH YOU
SHOW SKY Q WIFI HOTSPOTS
28We are already seeing the benefits of Sky Q
Sky Q customers are more engaged
69% 79% 84%
79 %
More downloads than Using Sky Q App Satisfied with ease of finding
Sky+ customers something to watch
29We have launched NOW TV to tap into the OTT and Pay Lite opportunities
NOW TV launched in 2012… …unlocking
11m
Free & Pay Lite households…
30NOW TV is clearly differentiated from Sky
Shared base of content
Efficient marketing
Trusted market leader Attracting new segment Best choice for instant entertainment
Peace of mind subscription of customers Flexible range of passes
Unrivalled breadth of choice Latest movies, live sport, must-see TV
Best TV experience Accelerating growth Quality streaming on multiple devices
Industry leading customer service Digital First customer experience
Increasing loyalty
31SHOW NOW TV BILLIONS
32NOW TV is clearly differentiated from Sky
Limited cannibalisation
between Sky and NOW TV
2%
Sky TV customers
joined NOW TV
33Our shared cost base delivers substantial returns
Customer cross sell continues to Our Smart TV box helps customers
deliver revenue growth find great content
45% 30%
Of NOW TV customers taking More likely to keep
more than 1 genre pass subscribing
34Our portfolio of products appeals to all households
Multi-brand portfolio
Ents, Cinema,
Entertainment
Sports, Kids
£6.99
£54
Original pack All packs
£20 £92
Greater efficiency
Subscriber Marketing Subscriber
acquisition costs costs retention costs
35Breadth Quality Affordability Compelling Value
3637
Unique
Brand Skill set proposition Go to Market
Trusted Consumer-led First or best Marketing
in market
Quality Track record Distribution
Attractive price
Flexible Technical Customer service
capabilities Continuously
improving
Data and
Analytics
381. 2. 3. 4.
Sky Store is Sky Box Sky Sky Mobile
rapidly Sets is the Broadband offers a
taking best box has grown significant
share of the sets service to be the growth
digital retail in the no. 2 ISP opportunity
market market
39And is on track to overtake iTunes
Rent 1,000s of movies Buy & Keep movies and box sets, on Fastest growing
straight to your TV your TV, devices and on DVD market share
Digital Retail Market Share
• 2,770 Movies available to rent • 2,650 titles available to buy 57%
• Movies available from 99p • Movies starting from £5.99 to 42%
£13.99 for latest releases 30%
• Latest releases for £5.49
• TV Box Sets starting from £22.99
4%
2014 2015
Sky Store iTunes
40SHOW SKY Q IDRIS ADVERT
SHOW SKY STORE BOX SETS
41Bigger than Netflix in the UK
• Over 350 Box Sets with the best
quality titles
• Exclusive Box Sets you can’t find
anywhere else
• Complete shows from start to finish
• Scheduled to compliment our linear
programming schedule
42Engagement growing at pace
Usage is growing at a fast rate… … which is pushing down churn
528m
395m
+34%
17%
reduction in churn for
active Sky Box Sets users
2015 2016
Churn Rates based Box Sets users vs non-users 43Proven experience in building an entirely new business
Broadband from the A range of services for every
Quality service
entertainment company household
DSL £5-£10 p/m
Fibre £10-£25 p/m
Talk £0-£12 p/m
44Fibre represents a large opportunity
Fibre is ready for more growth
Consumers want Fibre
Early Early Late
Innovators
Adopters Majority Majority
68%
Broadband prospects want to
2011 2020
take superfast Sky Fibre
High speed availability Fibre/High speed penetration
45 Source: Headroom Research 2015 (3293), ASA Conjoint Research 2016 (2077), Enders Report 2015,
Broadband Leavers Survey: Jun-15 to May-16 – Product RespondentsSHOW SKY FIBRE MAX
4647
Clear parallels with our experience in Broadband
• A brand already trusted by consumers
• Propositions suited to customer needs
• Scale economics – with the right balance of investment in our own network
• Go to market capabilities – to upsell and cross-sell at scale
• Customer management second to none
48Largest adjacent sector
Sky’s largest adjacent sector Track record of selling products to
our customers
UK Revenue 2015 Paid-for products subscriptions (m)
40
38
35
32
£15.2bn 28
£13.6bn £13.5bn 25
22
18
14
11
£6.2bn 9
1.16 products 3.24 products
per customer 2006 per customer 2016
TV excl Mobile Fixed Wholesale 2006 2016
adv telecoms telecoms
Source: Ofcom Communications Report 2016; Company Results 49Our customers want Sky Mobile
Sky homes account for There is strong demand from our
customers to take Sky Mobile
almost 2
50% out of 84%
10 3
of UK mobile contract would consider Sky Mobile
customers
50We are ready for launch
Network Supply Operations Readiness
SIM Risk management
Core Network Operating model
Apple / Samsung Sales platform
Roaming Transcomms
Distributor Provisioning
SIM management Training
Storage Service & billing
Number range Business Capability
Delivery / Repairs Revenue assurance
51Almost open for business
31 Oct
Pre-Registration
for customers
52• Refreshed product set
• Growth opportunities
• Execution focus
• Track record
• Mid-single digit revenue growth
• Attractive profits profile
Mission: Impossible - Rogue Nation
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