BSkyB's Brian Sullivan

April 2007

BSkyB is one of the leading pay-TV
services in the world and has always been at the forefront of innovation.
Besides offering various packages of linear channels, BSkyB has pursued a
multi-product strategy delivering such added-value ser­vices as Sky+,
Sky Broadband, Sky Mobile and Sky HD that have helped spur subscriber growth.
Brian Sullivan, the managing director of Sky’s Customer Group, says the key to
rolling out successful products is maintaining a close, ongoing relationship
with subscribers.

WS: What has your philosophy been in offering new services to
subscribers?

SULLIVAN: It ultimately
is about simplic­ity, flexibility and choice for customers. We’ve always
taken the view that innovation is at the heart of the company. We want to
constantly be changing and adapting to what customers want from us and be able
to provide the best entertainment experience possible throughout whatever means
they choose to engage with us. It’s in the lifeblood of the company, to be
frank.

We are now in excess of 8 million
homes in the U.K.—that’s one out of every three homes. Within those
homes, at least one in four is taking more than one product from us, and that’s
growing almost ­exponentially. We’ve introduced our PVR [product] Sky+ and
more than 2 million of our customers have it. That grew by 50 percent just in
the last 12 months. One of the main strategies that we try to adhere to is,
once we’ve introduced any new product, we never let it remain static. We want
to continually improve it and provide value back to the customers on an ongoing
basis. Sky+ is a great example of that. We introduced a new service to Sky+,
which is called Sky Anytime TV. That automatically brings a selection of the
best programs and movies that have been on the air on the broadcast linear Sky
channels, but not offered on demand, [directly] onto the customer’s hard drive.
That’s an incremental capability over and above the standard recording
capability that Sky+ has. About four months ago we also introduced the
capability of programming your Sky+ from your mobile phone or through the web.
We’re always trying to add new ser­vices into customers’ homes.

WS: Does that
come from responding to customer demand or from wanting to introduce something
new?

SULLIVAN: First and
foremost, it comes from the customers. We talk to customers probably more than
any company I’m familiar with. We have the full range of engagement, whether it
be focus groups, online sessions or continual customer tracking. And it’s not
just our own subscribers we’re talking to, it’s also potential
customers—those who don’t have satellite or might have some other form of
television provider. We are always gathering what they want and adapting our
road map to accommodate what they are asking us for.

They won’t tell us a specific feature
that they are looking for. But they’ll tell us that they want to be able to
absorb the content that we are selling to them in different fashions, and then
we’ll adapt whatever our services are to be able to do that.

To give you a great example, HD had a
much earlier start in Japan and in the U.S. than it did in the rest of the
world. So we made a decision a couple of years ago to bring HD to the U.K.
market, probably earlier than anyone had been originally planning. But we
decided to do it on a different basis. We decided that we were not going to
have a traditional linear HD service. We were going to go ahead and start with
a fully PVR-enabled HD service. So every HD customer of Sky is also
simultaneously a Sky+ customer, which gives us the capability of providing the
full time-shift capabilities that a PVR gives the customer in the first place.

When we first launched Sky+, five
years ago, it took us about two years to get to about 200,000 subscribers. And
within the last three years, it’s gone from nearly 200,000 to 2 million. In the
first nine months of launching high definition, we grew at the same speed that
it took us two years to get to on Sky+.

Most of the markets in Europe that have
launched HD have done so with very little content. They are only launching two
or three channels. We know our customers want the Sky experience and they want
choice. So we launched with a full array of channels. We have approximately
3,500 hours of HD content per month, and to give you an idea of the scale of
that, that’s the equivalent of the entire standard-definition output of the
traditional five terrestrial channels in the U.K. That’s why it resonates with
customers. They really don’t care about the technology; they care about the
experience.

WS: Most people can’t even navigate the technology. They just
want to know what they can do with that remote control in their hand.

SULLIVAN: We could have
a whole other conversation about that! But one of the things that’s always been
at the heart of what Sky does—the way I put it—is that your child
and your grandmother should both be able to use Sky within 30 seconds of
picking up a remote control. So you have all the power but you make it unbelievably
simple and easy to use. That carries through on everything that Sky delivers.

WS: What has Sky
offered for mobile phones?

SULLIVAN: We have
around 230,000 mobile TV subscriptions right now. We originally launched on the
Vodafone network and we recently rolled out to Orange and we’ll be on 3’s
network in the near future.

It’s a selection across a variety of
Sky channels and other multichannel partners as well. It ties in with what I
was talking about in the beginning, we don’t really care how the customer wants
to absorb our content. What we care is that when they get it, they are enjoying
it, and it’s worth the money that they are paying us. Mobile TV was simply
another way for them to be able to experience their relationship with Sky. To
us it wasn’t a separate business at all, it was just an extrapolation of what
we were already trying to deliver in a fashion that probably adapts more to
people’s lifestyles today than it would have five years ago.

WS: Are you
finding that mobile is mainly for a younger demographic?

SULLIVAN: Most Sky
products have a demographic that almost always mirrors the entirety of the U.K.
population. It very rarely skews toward one particular segment or another.
That’s because we already have a base relationship with one in three homes in
the U.K. So anything we introduce has the potential of being attractive to
anybody. Now, the mobile TV service does the same thing, but that is because
we’ve got a mix of content: Sky One for general entertainment, [some] music
services, Sky Sports News (which skews towards a male, slightly older
audience), and when you combine those, you end up getting a profile that is
amazingly similar to the profile of the entire country.

WS: What plans do you have for digital terrestrial
television—DTT?

SULLIVAN: We recently
announced that we intend to launch a service later this year on digital
terrestrial. We haven’t confirmed the final channel lineup yet, but we ­absolutely
intend to take some of the best content from our basic and premium channels,
including Sky News, Sky One and probably, more importantly, Sky Sports and Sky
Movies. It’s going to replace the three channels we have on Freeview, which are
Sky 3, Sky News and Sky Sports News. We think it’s absolutely consistent with
everything else we have done—give our customers the convenience of
receiving our services in the manner that fits them best.

For example, there’s a pretty
significant segment of the population, because of line of sight, or other
reasons, who can’t receive the satellite service. But they would love to get
Sky Movies and Sky Sports and they would love to get it from Sky. This gives us
the opportunity to open new markets that we haven’t been able to reach in the
past. And we also think that there is a pretty significant group of customers that
are sitting on Freeview, and while they would love to go on Sky, they might not
necessarily want to go through that added jump in order to go on to satellite.
And being able to have a really easy path on digital terrestrial just made a
lot of sense for us.

WS: Are you
finding that once you launch a new service, it does not necessarily cannibalize
the others but they all work to support one another?

SULLIVAN: Right now, because most of the services we have introduced
are actually value-added services, it’s actually not cannibalizing at
all—it’s growing. For example, our Sky Anytime PC service—our
download service to PCs that our customers get for free; most of the content is
actually part of their subscription. We got more than a million downloads in
less than a year. More than 250,000 people have downloaded that application.
But we are not seeing it as substitutional right now, we’re seeing it as
incremental. That could change in the next five years, because who knows how
consumer behavior will change? And the critical point for us is to make sure
that no matter where the customer wants to observe the content, we’ve got the
capability for them to access it from us. That way we can maintain a
relationship.