Sports fans will be paying more to watch the upcoming Rugby World Cup on Sky TV, despite the broadcaster's loss of more than 8000 subscribers earlier this year.
The company announced yesterday that it would be increasing the cost of its Basic and Sport packages by $1.15 and $1.61 respectively.
The rising costs were due to the increasing cost of content, Sky TV spokesperson Kirsty Way said.
"The cost of content in today's very competitive market is increasing and costing us a lot more to purchase."
Shares in Sky Network Television dropped 0.9 per cent in February after the company delivered a strong first-half profit but lost 8707 subscribers.
At that time, chief executive John Fellet said the disappointing result was due to subscribers having more choice than ever.
"Our challenge has been attracting new subscribers to the platform in a period where the industry is transitioning," he told BusinessDesk.
Increasing prices amid heavy competition from online subscription services was "brazen" but unlikely to impact the company much, NZ Herald media commentator John Drinnan said.
"About three-quarters of their customers are in sports and we're going towards the Rugby World Cup, so it'd be surprising if many people dropped it."
Drinnan said the company was more likely to lose customers who subscribed for their movie and drama channels, which had "always been a weak point for Sky".
Forsyth Barr analyst Blair Galpin said most Sky subscribers would accept the rising costs.
"You'll obviously hear complaints on the day but they've also announced more content for the movie package and will be launching more services later this year," he said.
"At the end of the day I think for the majority of Sky subscribers it's no different to the annual price increase you get."
In 2013, Sky TV lost the rights to screen English Premier League football and last year lost its golf coverage, which both went to the online streaming service Coliseum.
Despite having lost these rights, Sky said the increase in price of the sport package was justified due to increasing costs.
"There's a lot of other sport on there and quite simply the price of those sporting codes and events is increasing," Way said.
Galpin said most Sky customers were after the popular Kiwi sports that Sky provided.
"The reality is that the sport package is really bundled around the core sports of rugby, cricket, netball and rugby league.
"Some customers who want the other products will reconsider their Sky package but most customers are actually after those four core ones."
The increased competition from online subscription services and loss of exclusive content meant Sky was passing on costs to its loyal customers, Regan Cunliffe of television ratings website Throng said.
"Now that you've got Spark's Lightbox doing sports, Sky has to spend more to get the sports rights that they had and they're basically passing on those costs to the consumer."
Customers did not appreciate the increasing prices and it was likely to alienate them, he said.
"How they are trying to maintain their return for shareholders is to squeeze more out of the subscribers that they have, rather than provide a better service."
Digital rights for sport would also be a problem for Sky in the future, he said, as the NRL and New Zealand Rugby Union could choose to work directly with other digital providers to broadcast online.
Sky announced its online streaming sport service Fanpass in February. It provided online-only access to Super Rugby, NRL and Formula 1 racing, offering season passes, monthly passes and week passes.
However, the price remains quite high, with a monthly pass costing $69 for Super Rugby, $59 for NRL and $26 for Formula 1.
"It's a complete rip off," said Cunliffe, who added that the service was a token gesture to show regulators that the company was doing its bit digitally.
"If you want to watch the NRL, you can get that for a fraction of the cost by using a VPN (Virtual Private Network) to access the Australian service as opposed to Sky's service."
He said Sky's reasoning for the cost hike was "ridiculous" and "completely false".
"Sky are just milking it and what they're basically doing by raising the price is saying to their existing loyal customers 'I want you to foot the bill for everyone else that's deciding they want to get content elsewhere'."
The current costs for the packages are $48.07 a month for Sky Basic and an additional $26.68 for Sky Sport. After the increase, these will rise to $49.22 and $28.29 respectively.
For a household subscribing to both packages, this means a cost increase of 3.7 per cent.
Meanwhile, new Sky subscribers can get Sky Sport free until August 31.
The price increases go into effect on June 15. As yet, it will only affect residential subscribers.