August 07, 2011

Virgin's Q2 results - a few comments

I've just returned from a fortnight's break so the Q2 results for Virgin and Sky were published with no comment from me at the time, so let me quickly address that now.
As we've now grown to expect, it was another great set of numbers from Sky and a mixed, somewhat disappointing performance announced by Virgin CEO Neil Berkett. Whilst revenues were up thanks to increased revenue per customer (that recent price hike) Virgin's customers dropped, 21k down on the TV side and 36k down in total. It's always a weak quarter for Virgin (last year in Q2 they added 9k customers but the previous year lost 26k in Q2).
Meanwhile Sky turned in more exceptional numbers - TV up by 40k, HD penetration up 30% on the previous year's stella performance.
Even with broadband, supposedly Virgin Media's main strength, VM lost 18k customers whilst BT added 141k and Sky added 174k. Sure, Virgin has stronger take up of triple play and higher speed broadband customers, but those are worrying numbers if they're not just a seasonal blip.
So where does VM go from here? We shouldn't really read too much into a single quarter, especially Q2, but Virgin really does have to hope TiVo takes off and brings new customers to the cable platform. The TiVo product has had generally strong reviews (although this month's CNet review is more critical and is perhaps a little more honest than some) and the marketing is now kicking in. Whilst it makes a few headlines with every announced speed hike, the demand for even higher broadband speeds seems to be at best small.
The day before I went on holiday a colleague and I presented to my company's senior management on the future of TV and included an extended piece on TiVo's capabilities. It got everyone pretty excited and even a few were talking about moving to Virgin...until they realised that it meant losing Sky Atlantic, which dampened their enthusiasm completely. Funny that...


Anonymous said...

Hope you had a good holiday matey,nice to have you back.VM seemed to have buried there heads again in the sand regarding content especially HD,Hence the decrease.Hopefully now after these results they will do something about it and relise that tivo alone aint gonna bring new/keep customers

alan said...

i agree 100%

Richard said...

in my view, there are three things needed by a company.

1. the products...
Tivo rocks, high speed bb rocks... but these are niche products right now as opposed to mainstream. So they have the potential to dominate this space but need to reach the masses.

2. the user experience...
product wise is OK (tivo interface is good)
reliability is good
call centre experience is average.
but in this market, there is no real difference between the competition.

3. the content...
this is the big let down for VM and they keep loosing to sky.
Linear programming is important to people,it too until last year to realise this.
HD channels are now important - despite not all HD is HD (you need to understand how US programmes were and now are recorded and what resolution PAL is recorded at, to understand the dig here)
Finally VM need to get new and exciting content and not miss out on channels like Sky Atlantic.

The real point is, people buy on content, they always have and they always will.

VHS won over BETAMAX because of content not technical merit.
Microsft won with DOS on the PC because they got developer to make content for MS DOS.
Apple are ahead in the smartphone wars because of Apps, ie content

We all see the trend... shame VM haven't... content not the other areas of product development will win customers.
Those other areas loose customer if not good enough.

campbellg said...

It's all about content - I do not know one Sky customer who has any interest in switching to VM, even with Tivo, and the reason is that they would lose so many channels.

paininthegulliver said...

its all about value for money i think.

not content.

for example Sky realise their broadband is total crap so they are virtually giving it away.

Virgin now starting to look ridiculously expensive for what you get.

Landline now £13.90? Really??

campbellg said...

Yes, point taken, paininthegulliver, I don't feel I get value for money with VM as they don't provide me with the content that I want to watch.

patrick192447 said...

Having got vmtv for the tivo box thinking it may well be the future of tv what a let down what do you actually get a few apps and a thumbs up/down apart a sky hd box does the same job.30 less hd chanels £7 charge for sky sports hd untill vm take hd content serious and stop wasting resources on things like spotify they will never be in a position to take on sky .Cancelled my subscription and gone back to sky; lifes too short to wait on vm to get there act together.

theironchimp said...

I must admit there attitude towards content dissapoints me and when I can move I will do unless they actually commit to adding more HD content.

ADarbin said...

I have to stick my nose in on this one, TiVo is finding to much content for me, when I was on sky I think I watch (recorded) about 20 shows on 5 channels on a regular basis. I will admit though that I'm not a big reality fan and most things on SKY Atlantic leave me with a sense of And.... the thing that got me to VM in the first place was the on-demand section and there are a number of places VM trumps SKY but as we have seen dominance often comes from buying customers off rather then having better products and services.

patrick192447 said...

Adarbin what is your;e point as far i can tell there is none

campbellg said...

Dominance comes from buying customers off?

What does that mean? Are you saying by securing the best content for their customers, Sky are bribing their customers to stay or something?

I may be missing the point you are trying to say but surely by securing content they are creating a 'better product and service' and that's why their customers stay with them?