Sky slashes price of Sky+ HD box

Sky has cut the purchase price of its flagship Sky+ HD box from £150 to £49 with immediate effect.

In its results presentation for the six months to December 2008, the company said a "significant opportunity [is] emerging in HD", with 7m homes already equipped with TVs meeting the HD Ready specification and a growing penetration of HD game consoles.

"We are seeing a dramatic shift in awareness of HD and more and more people are starting to regard HD quality video as standard," the company said. "We have been positioning our business to take advantage of this long-term trend and have assembled the best HD service in the UK by far. At the heart of this is an outstanding range of content from high quality brands."

Sky said sales of Sky+ HD and its equivalent standard definition box "accelerated sharply" over recent months, with net additions reaching a record 188,000 during the latter half of the year. The company said it would create a thousand new customer service and installer jobs to support demand at a cost of £30m per year.

"We have structured our investment so that the majority of costs are geared to demand; Sky+HD customer acquisition costs will only be incurred in proportion to take-up of the product," the company explained. "At a headline box price of £49, we estimate an incremental cost of adding a Sky+HD customer (either new to Sky or existing customer upgrades) of £100. This cost is fully recovered within 12 months through the ongoing monthly revenue from the HD pack subscription."

In the most recent quarter, Sky reported net customer additions of 171,000 - up 2% year on year - with its customer base now totalling 9.238m. 779,000 of those subscribers now take Sky+ HD, with over half its total subscriber base now taking Sky+ in its standard or high definition forms.

The rise in subscriber numbers coupled with reduced churn and increased revenue per subscriber contributed to total revenue of £2,601m in the second half of the year, up 6% on the year before, and an adjusted operating profit of £388m.