Sky warns it may lose subscribers after RWC

Sky is about to introduce an upgrade to its MySky video recorder box which connects it with the internet. Photo / Dean Purcell

Sky TV is under threat as it faces the end of its monopoly on pay television and has raised the prospect of viewers switching off when the Rugby World Cup ends.

Chairman Peter Macourt told yesterday's annual meeting that Sky faced an 11 per cent fall in profits for the 2016 financial year.

Sky shares fell 10.5 per cent yesterday and are now down 30 per cent over the past 12 months.

"The delivery of new services including Neon, FanPass and Sky On-Demand has increased costs ahead of attracting a critical mass of subscribers," said Mr Macourt. "The 2016 year will also see an increase in programming costs for the Rugby World Cup, the new Sanzar Rugby agreement, the new Disney and Discovery channels and a general escalation of content costs with the entry of new competitors."

He warned the pay TV provider might see some subscribers opting out after the Rugby World Cup.

Sky's approach has been to maintain its stable profitability rather than overspend on the latest technology. But the game changed last year with the arrival of Spark-backed Lightbox, Coliseum Sports, and especially Netflix at the start of this year.

Big improvements to broadband speeds and "all you can eat" broadband packages meant Sky's dominance outside sports was damaged.

Sky is about to introduce an upgrade to its MySky video recorder box which connects it with the internet.