When Murdoch recently closed his acquisition of U.S. satellite operator DirecTV, it was reported that the News Corp. chairman would dangle the digital video recording feature as one of his main carrots in any consumer marketing efforts to convert cable subscribers to his system.
A $37 million marketing campaign launched in October through WPP Group's HHCL/Red Cell has more than doubled the Sky + customer base from 115,000 to approximately 250,000. This was achieved by selling the core idea that Sky +—which launched in August 2001— enables one to "Create your own TV channel." The ads feature comically mismatched celebrity couples who nevertheless enjoy a harmonious life together, thanks to Sky +.
Richard Huntington, HHCL/Red Cell's head of planning, said, "We deliberately positioned it as something new in your life rather than a glorified VCR. Our aim is to make Sky + a mass luxury product."
At the same time, Sky slashed the price of the box from $550 to $370 and scrapped the $18 monthly charge for customers who take premium Sky satellite TV channels.
Sky's new target is 315,000 Sky + customers by June. Sky currently has seven million subscribers. DVR penetration is currently 1% of U.K. households, but Datamonitor predicts it will reach a quarter of U.K. homes by 2007, similar to the 20% penetration forecast by 2007 for the U.S. market offered up recently by the Yankee Group.
Sky + customers watch on average 29 hours of television a week versus 25 hours for other Sky viewers. Of course, as both a broadcaster and a DVR marketer, Sky has to find a balance between the needs of the marketers who fund their channels and the demands of consumers.
%%PULLQUOTE_LEFT%% As Sky offers commercial avoidance features like U.S. DVRs do, its research indicates that the overall decrease in advertising consumption is 17 per cent in Sky + homes, but claim that there's no corresponding decrease in advertising awareness.
Sky's research indicates that advertising recall in Sky + households is, at 57%, only very slightly down on the 59% measured in ordinary Sky households, and still remains higher than the 54% recall in analog households.
A Sky spokesman said, "[DVRs] will become ubiquitous and they will be integrated into all kinds of household consumer goods. We are working with the advertising community to address the challenges and exploit the opportunities, and we have designed our products to enable us to work with them. Other [DVR] manufacturers won't have advertisers' interests close to their hearts."
Other DVR manufacturers, in fact, pose little threat to Sky + at the moment. TiVo launched in the U.K. in March 2000 but withdrew from the U.K. last fall, leaving only a small subscriber base (numbers are not revealed) who are serviced mostly from the U.S.