Upgrade, new competition get blame for Sky's reputation tanking

Sky TV's recent upgrade was not well received.

Sky TV's recent upgrade was not well received.

A disastrous system upgrade and growing customer dissatisfaction with scheduled television are being blamed for New Zealand's lack of trust in the Sky TV brand.

The latest NZ Corporate Reputation Index has been released. While Air New Zealand took the top spot, Sky TV slipped two places to the bottom.

Technology commentator Peter Griffin said it was a predictable result.

"Between the botched My Sky upgrade, various outages and a growing awareness of alternative entertainment options, it is no surprise that Sky isn't a much-loved corporate brand among Kiwis," he said.

READ MORE: Kiwis said Air New Zealand NZ's most reputable company

"The company acts much as Telecom did in the dying days before it was split up - milking its customers for as much as possible for as long as possible. It also shows the lavish effort to market the Sky brand hasn't really paid off. Consumers want value, flexibility and convenience and Sky's record on all three is increasingly patchy."

University of Auckland marketing expert Bodo Lang said there was some "psychological reactance" happening among Sky customers.

"That's when people feel their freedom has been taken away and that's what has happened with the recent upgrades. If an upgrade isn't clearly better, people struggle with it because they have long-established habits of how they use their remotes and use the graphic interface. If the benefit of the upgrade is not apparent, people react negatively. That's exactly what has happened here."

Sky was suffering because of new, cheaper entrants into the TV market, he said. Digital platforms including Netflix, Neon and Lightbox all now offer on-demand content for New Zealanders.

"People feel they've got all these Sky channels to watch but they are less certain about the value for money. The outlay for a subscription is pretty substantial over a year when you compare it to the alternatives. Some on demand services are free and other options are $10, $15 a month."

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A basic Sky package is $50 a month.

"The value for money does not stack up any more, unless you are a really big fan of sport," Lang said.

Many people found it cumbersome to trawl through the programming to find what they wanted to record at the right time on My Sky, when it was easier to select content on platforms such as Netflix, he said.

Lang said it was likely that Sky would have to make some changes, either by overhauling its operating model to offer something different or reviewing its prices.

Investment adviser and analyst Grant Davies said it was likely Sky would be able to hold on to a core customer base for some time yet, because not everyone would be comfortable moving to a platform such as Netflix, Neon or Lightbox.

He said it used to be that Sky was well-positioned because it was the only company with the infrastructure to provide its service.

Now technological developments have made the infrastructure much more accessible. "Unless they can do something that will legitimately differentiate them from the competition, they're in a race to the bottom."

Sky has been approached for comment. 

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