[Satellite News 09-25-09] Germany is one of the world’s biggest markets for pay-TV but has proved a tough market to crack for satellite pay-TV operator Sky Deutschland, formerly known as Premiere.
    In 2008, the operator was beset with problems, including piracy and other system compromises as well as a scandal over falsifying subscriber figure. The rough year lead to widespread changes within the company. The man now responsible for transforming Sky Deutschland is CEO Mark Williams, former COO of Sky Italia.
    Despite Williams’ successful track record in Italy, industry analysts greeted Williams’ plans with a lukewarm reception and agreed that the company has a difficult task in winning favor with its German customers. “The FTA environment in Italy is not really as high of quality as in Germany. In Germany, you have more than 40 [free-to-air] channels, and most of these are high quality. Italian people are ready to spend on pay-TV because Sky Italia is like a status symbol for customers. This is not the case in Germany. German people would rather spend more on electronics and cars but not so much for pay-TV. You are significantly more limited to generating high ARPU than in Italy,” said Sonia Rabussier, a satellite equity analyst at Oppenheim.
     Williams spoke with Satellite News about the challenges ahead and why the operator felt compelled to ditch the Premiere brand in Germany.

Williams: The launch of Sky in July marks the starting point of a new era for the German and Austrian pay-TV landscape. Extensive market research demonstrated a clear need to adopt a new name to support the launch of the new service. We are going to re-write the German and Austrian pay-TV story. The Sky brand symbolizes a completely new start and offers a TV experience which is unprecedented. In everything we do, we put the interests of our customers at the very center — whether it’s top programming, a cl early understandable packaging and pricing structure, user friendliness or customer service and innovation.

Williams: We are very pleased with the progress since the successful launch of Sky on 4 July, with awareness of the Sky brand very quickly exceeding 50 percent. In these first few weeks, we have seen a very positive reaction from both our existing customers upgrading to the new expanded range of Sky services, including our new comprehensive HD offer, as well as a strong increase in the rate of subscriber additions.

Williams: Having successfully overcome the liquidity risk at the end of 2008 and recapitalized the company, Sky is now in a financially secure position. This also applies to our operational platform, with piracy eliminated, winning exclusive Bundesliga rights for cable and satellite transmission until 2013 and a clear focus on monthly paying subscribers. We have managed to establish a very sound basis for growth in the German and Austrian markets. Now our focus is on our core business: enhancing program attractiveness, reaching a high level of customer satisfaction, improving usability and convenience and pushing marketing and sales. I am convinced that we have now begun building a profitable pay-TV business.

Williams: We were very badly affected by piracy during 2008. I would estimate the cost impact in the tens of millions.

Williams: We strongly believe that high-definition television is the future. This is why we put a clear emphasis on our HD portfolio. We currently have seven HD channels — the first comprehensive HD service available in Germany and Austria. … We have not set specific targets for HD subscribers, but going forward, all receivers that we deploy will be HD capable.

Williams: We need to break through a certain level of inertia, but we do not underestimate customers’ desire for more and better programming once they are aware of it.  

Williams: We consider video on demand an attractive service with a sustainable effect on customer experience, and, in future, are striving to expand our range of offerings in this area.

Williams: Our goal is to position Sky as the leading pay-TV broadcaster in Germany and Austria, with a high level of brand awareness. The first thing we want people to associate Sky with is, very simply, extraordinary TV entertainment in every respect. This is what people ought to expect from us, and this is what Sky will deliver.