The Sky Digital venture has made a serious dent in BSkyB's profits. The results showed that BSkyB had made a pre-tax loss of £389 Million Sterling. Much of that loss has been attributed to funding Sky Digital and the converting from an analogue subscriber base with such incentives as free Digiboxes. However BSkyB lost 87000 more analogue subscribers than it gained in digital subscribers.

The figures for 1998 showed that BSkyB made a profit of £271M. The announcement of the figures had been softened by stories that the number of subscribers that had signed up for Sky Digital was 1.2 million. This figure apparently was ahead of expectations. BSkyB had expected to reach the one million mark in October.

BSkyB claimed that 515,000 subscribers to Sky Digital were new subscribers. The move to offer free Digiboxes has apparently been successful according to BSkyB. This increased to 660,000 when the free Digibox offer went live.

BSkyB faces increasing competition from OnDigital and cable television in general. Its satellite revenues have only grown by 1% according to an artcle in the  Financial Times. The article also stated that the uptake of BSkyB by cable television customers was slowing down with many just taking the basic packages.

This basic package approach is characteristic of subscribers to BSkyB analogue services. The main attraction of the analogue services is the sports coverage. The movie channels have traditionally suffered from the video window. The movies on the channels have in most cases been available through home video rental up to six months before they are screened on the movie channels.

In an effort to cope with the effects of newer technology, BSkyB has expanded its operations to offer subscribers low cost telephony and internet services. A cross-promotion deal between Sega and BSkyB was announced yesteday (11th) for Sega's new Dreamcast games console. BSkyB would be given space on Sega's Dreamcast internet portal and Dreamcast would be promoted on BSkyB's SkyNow portal. The Dreamcast console would also be packaged with the Sky Digital Digibox. The price of this package was not given.