Until two months ago, BSkyB charged viewers only for its film and sports channels. On 1 September it introduced its new 'multi-channels package', charging viewers pounds 6.99 a month for a package of other channels they previously watched free. The pill was sugared by the launch of new stations, including Nickelodeon for children, UK Living for women and QVC for armchair shoppers, but only a few satellite channels - such as Cable News Network, The Cartoon Channel and Sky News - remained free and unscrambled.
Despite some early complaints, the gamble seems to have paid off. David Elstein, BSkyB's head of programming, says more than 400,000 households have signed up for the 'basic' package and increased numbers are subscribing to the film and sports channels, at a cost of up to pounds 20 a month. And while up to 200,000 'dish homes' are thought not to have subscribed so far (no one knows exactly how many homes have satellite dishes), Mr Elstein believes that many of these will eventually pay up.
He could be right, because BSkyB claims to have solved a problem that has dogged pay-TV services all over the world - how to hang on to their subscribers. Traditionally, cable TV services in the United States and the UK have seen a high proportion of their customers cancel their subscriptions each year - a process known in the industry as 'churn'.
Eighteen months ago, BSkyB's churn level was 30 per cent a year, according to Chris Townsend, its director of consumer marketing. Now, he says, it is below 10 per cent - and much of that is accounted for by people moving house, which has overtaken redundancy as the biggest single cause of cancellation.
The key to BSkyB's pay-TV operation - and its reduction in churn - is its subscriber-management centre, which employs 2,000 people at Livingston, near Edinburgh. Here up to 160,000 phone calls a week are received from viewers wanting to open or cancel subscriptions, order new channels, question bills or find out more about the station's programmes.
When customers ring to cancel their subscriptions, an elaborate procedure comes into play, aimed at persuading them to change their minds. 'We ring them back and talk to them about the sports events and movies coming up in the next month,' says Mr Townsend. 'We ask them their reason for wanting to cancel, and if they say they can't afford it, we tell them about our lower-price packages, which they may not know about.'
Even those paying their full BSkyB subscription may soon have to pay extra for some events. BSkyB is planning to experiment with a pay-
per-view system in which viewers will pay for individual programmes, not channels. Mr Elstein says one idea might be a film premiere, coinciding with the film's UK premiere at a West End cinema.
What is in no doubt is the technology. It is as easy for BSkyB's subscriber-management centre to switch viewers on for an evening as for a month. Whether viewers will take to paying even more for their viewing is another matter.
The author is the BBC's media correspondent and reported on multi- channel television for Radio 4's 'Special Assignment'.Reuse content