Tag: revenue

Walk down any street in the country, and you’re bound to see a Sky dish. With subscribers still increasing, a viewing target of 10 million by 2010 and revenue increasing to £1.4 billion, it seems that Sky TV is hardly suffering from the current ‘challenging conditions’ besetting so many firms.

Enter Ofcom, the independent regulator and competition authority for the UK’s communication industries that has been investigating the UK Pay TV industry since 2007. A consultation was published on the 26th June 2009 in which Ofcom indicated that BSkyB should be forced to make its premium sports and film channels available to rival broadcasters in a bid to ‘promote choice and innovation’. The articles below look at this conflict.

Sky may have to share TV channels BBC News (26/6/09)
Ofcom may set Sky’s wholesale prices Digital Spy, Andrew Laughlin (25/6/09)
Ofcom proposes measures to improve competition in pay TV Ofcom (26/6/09)
Pay TV Phase three document: Proposed remedies Ofcom Consultation (26/6/09)
BSkyB in war of words with Virgin Media and BT Guardian, Leigh Holmwood (24/6/09)
BSkyB keeps Premier League rights BBC Sport, Football (3/2/09)
Sky will fight Ofcom over Premium TV Tech Radar, Patrick Goss (26/6/09)
Pay TV market investigation: Consultation document Ofcom (18/12/07)
Sky asked to open up Premium sports and movies Times Online, Peter Stiff (26/6/09)
All believers in a competitive market must back Ofcom to take on Sky Telegraph, Neil Berkett (26/6/09)
Ofcom: Sky not playing fair with premium content Tech Radar, Patrick Goss (26/06/09)

Questions

  1. How well does BSkyB fit into a monopoly position for its premium content?
  2. What are the regulatory options open to Ofcom?
  3. How does Ofcom aim to introduce more competition and fairer prices into the Pay TV market?
  4. Why is it argued that competition is in the public’s best interest? Do you agree with this, or should BSkyB be allowed to carry on as it is?
  5. What has enabled Sky to become such a dominant force?
  6. How do you think the collapse of Setanta will affect this debate?
  7. Sky TV has seen its profits continuing to grow. Given that we’re in a recession, what does this tell us about Sky and the type of good or service that it supplies?

Google is a classic example of the new ‘Internet economics’. The main service it provides – search – is completely free and yet it is an enornmously profitable company and growing fast. Much of what they provide in addition to their search service is also free: Google Docs, Google Maps and Google Scholar. So how do they do it? The first link below is an article considering this issue and the second link gives access to an archived version of In Business giving further detail. The programme is well worth listening to. A key part of the explanation for this new phenomenon relates to the low and falling costs of providing these internet services.

Buy none, get one free BBC News Online (8/1/09)
Free for all BBC News Online (8/1/09) In Business – programme archive

Questions

  1. Write a short paragraph explaining briefly the Google business model.
  2. Identify two fixed and two variable costs of running an internet search service.
  3. What are the marginal costs of Google providing additional internet searches?
  4. Discuss the relationship between costs, revenue and profit for a company like Google as demand for their servces grows.

Increasing numbers of firms are offering goods to consumers for free. Chris Anderson, the editor of Wired magazine, has developed a thesis called freeconomics which postulates that this trend will increase and that firms that don’t join in will go to the wall. “As much as we complain about how expensive things are getting, we’re surrounded by forces that are making them cheaper,” Anderson wrote in a recent article.

The big giveaway Guardian (6/5/08)

Questions

1. Explain what is meant by the term ‘freeconomics’.
2. How can firms afford to make goods and services available for free?
3. “Anderson’s idea is that the internet, by reducing marginal costs, encourages businesses to make their money by offering free goods or services to an extent we have not witnessed before”. Discuss the extent to which doing business over the internet reduces marginal costs.