October 27, 2011

Q3 2011 results

From MediaGuardian:
Virgin Media has won back 6,300 cable customers in the three months to end of September, partly making up for losses of 36,000 over the summer after students disconnected for the holidays.
Financial results on Thursday showed that revenues grew 2.2% to £1bn year on year, marking a 3.3% rise for the first nine months of the year.
Overall cable customer numbers increased on the second quarter to 4.79 million. The number of telephone customers fell by 13,300 to 4.31 million, as use of mobile phones at home gradually replaces landline phone calls. Virgin says that customer 'churn' – the proportion of customers who quit – has increased, to 1.7%, although those leaving its network spend on average £38.30 a month, 20% less than the bulk of its customers.
The strategy of selling more to its existing customers led to a steady rise in ARPU (average revenue per user), up 3.2% so far this year, to £47.86 a month, which is Virgin's highest on record and compares with around £44.58 a month at rival BSkyB.
More customers are parting with extra cash for higher speed broadband and on its latest digital video recorder from TiVo, which is being promoted on television in an advertising campaign fronted by Hustle actor Marc Warren.
Chief executive Neil Berkett said: "Our results show that we're successfully serving what is a rapidly emerging market for better quality services. The demand for superior connectivity is accelerating as more people, regardless of their circumstances, recognise the best digital technology is worth paying more for."
Virgin had sold 222,000 TiVo subscriptions as of Wednesday, up from 36,000 at the end of June. The number of on-demand TV shows watched each month reached 80m, an increase of 10% on 2010, although that figure is likely to rise as TiVo adoption spreads.
The company said just over half of new customers are opting for high speed, 30 megabits per second (Mbps) broadband, with the number rising 178,000 to over half a million. The number of households taking 50Mbps or 100Mbps was 187,000, twice as many as a year ago.
Over 1 million customers – 26% of the cable base – are now taking over 20Mbps, the lowest tier of above basic speed. Operating income increased year on year from £102m to 128m, while the company made a loss before tax on continuing operations of £74m, compared with a profit of nearly 10m the year before. Virgin still has total debt of £5.7bn.
The company announced that it would use £250m of the £348m raised from the sale of its UKTV channels during the summer to expand its share buyback programme, which Goldman Sachs believes could see Virgin acquire 12% of its outstanding shares by the end of 2012. This takes to £1.25bn the total that will have been spend on buybacks since mid 2010. Goldman Sachs analysts said: "We believe these results validate management's efforts to grow customer lifetime value, with TiVo success creating helpful ARPU tailwinds for 2012."
And from the VM Press Release, this on their TV offering:
In the quarter we started to market and sell our new TiVo service to new customers and since July have been running our first TiVo TV advertising campaign. The strong early demand for this service has exceeded our high expectations and by the end of the quarter we had 162,900 TiVo customers, more than four times the number of customers with which we entered the quarter. We are seeing this demand for TiVo from both new and existing customers, with around one third of all TiVo subscribers being new to Virgin Media. Growth has continued strongly in October, and we had 222,000 TiVo customers as of 26th October.
Widespread consumer research supports trends we see within our customer base whereby people are increasingly using multiple devices simultaneously, such as watching TV while playing with a tablet device.
As we move to make TiVo the hub for all our customers’ entertainment needs, we are introducing a companion app later this year which will complement the TiVo television experience. This will replicate the graphical interface and functionality of the service while enabling customers to browse, search and control their TV through a tablet device.
Both our new and legacy TV services stand apart from other TV platforms in the UK with advantages which include access to an unparalleled library of on demand programming. After the quarter end we introduced even more content following an agreement with BSkyB. This will increase what is the largest on demand service available in the UK by over a third, as measured by both users and hours of content. We remain on track to meet our predictions of 1bn views for 2011. Around two-thirds of our TV base regularly used our ondemand TV service during the quarter, averaging 80m views each month, which is an increase of 10% from the same period in 2010.
We currently have around 3.8m TV customers, of which 1.8m or 49% are able to experience HD after a further 165,200 customers took an HD set-top box in the quarter. We recently announced the launch of five new HD channels from UKTV, taking the total number of HD channels available up to 36. In addition, the number of customers who subscribe to our Sky premium channels increased by 7% to 775,100, which represents 21% of all TV customers.
The number of paying TV customers increased by 28,800; however churn in the lowest free “M” tier, with 34,500 net disconnections, meant the total TV customer base fell by 5,700 in the quarter.
We are also about to launch our exclusive partnership with digital music service Spotify, which will make Virgin Media the only entertainment provider able to integrate the Spotify streaming music service into all of
its consumer offerings. As well as online and on mobile, we are working to build an exclusive TV app which will make a catalogue of over 13 million music tracks available to listen to through home cinema systems.

22 comments:

sibod said...

Now will people shut up about how not having Sky Atlantic is driving customers away from Virgin?
Clearly that's not the case overall, and clearly they are more interested in higher speed broadband and Tivo than getting a handful of american dramas.

Buzby said...
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Buzby said...

As you note, Sky Atlantic is noting special - but decent broadband IS, and clearly ADSL remains the cross other operators have to bear, wich Virgin do not. A shame then, that some of us are stuck on 20Mb because their marketing abilities insist on 'upgrading' users to their 'SuperHub' which has few devotees...

Resdent Bipolar said...

@Buzby...Yes the SuperHub has its flaws, but there is no reason you can't use another wireless router. It's especially easier with the "Modem Only" feature released in the latest revision of the SuperHub firmware.

I'm on 30Meg, and yes I have the SuperHub 2. At first it performed AMAZINGLY but I began to experience issues with the Wireless. So I now use the SuperHub as a modem and have another router for the routing, firewall and wireless features. It works BLISSFULLY and has for almost 5 months now - 3.4MB/sec pretty much all day (a LITTLE slower during peak times).

Virgin Media is growing...and my god, their services are still improving since they took over NTL & Telewest.

Richard said...

I love the broadband and everyone I know who has adsl has problems and I end up spending half a day tuning their setup to give them a little bit more performance, but not a lot more. I've yet to meet someone with 10+mb on adsl. My friends and family all envy my (now) 30mb service... Even when I had 10mb I was still out performing them all.

Superhub... I always switched to a modem configuration and used my own router... IMHO I thing you get what you pay for with a router. Don't complain, just get the setup you want.

I have always had about 95% of the published bandwidth and I've been a cable bb user since it was first available with Telewest (about a decade).

Given I need good BB for my work, I wouldn't move from cable for this reason.

Tv is what it is for me, whether I have 100 channels or 200 doesn't worry me. I don't need more channels, I need a way to find the right programs on the channels I have. TiVo sorts the wheat from the chaff!

In short as a TiVo user (had series 1 TiVo) and a Cable BB user for over a decade, the two differentiators of BB and TiVo make virgin media a no brainier FOR ME... Sky Atlantic; and extra HD channel or two.. So what, not enough to worry me.

I think VM despite all it's annoyances is getting something right. And it's figures seem to show this.

arabiskit said...

@Richard... Totally agree ;) My 30Meg broadband is utterly consistent, compared to my family who live in a non-cable area who have not only slower, but also much less consistent & reliable service. The SuperHub - have had it a few months, connected wired to my p.c. and wirelessly to everything else including PS3 for gaming - can't remember ever having a problem being beaten by some kid in Japan with lightening reflexes!

I would say the one problem I do have is the on-demand. Sure the library is getting a bit better (it’s still full of rubbish though) but quite often it's either unavailable (due to high demand - in my area, I don't think so) or the TV screen chirps (making the kitten go insane by the way) with lots of pixilation making it unwatchable. The other slight issue I have, ok I know I said one problem, is the interface - it's way too slow. Compared to my brothers Sly+ box it is, at times, embarrassing.

Those 2 things aside tho, as you said, I wouldn’t leave Virgin just to get Sky Atlantic or a couple of extra HD channels either.

campbellg said...

36,000 punters left in the last quarter - supposedly mostly student churn, and only 6,300 new customers this quarter compared to 14,100 last year for the same quarter.

No I won't shut up, sibod - VM's TV isn't good enough.

paininthegulliver said...

to be fair campbell the gap is closing between sky and VM and a lot of the disconnections were from the lower tier TV customers.

martine93 said...

"The number of paying TV customers increased by 28,800; however churn in the lowest free “M” tier, with
34,500 net disconnections, meant the total TV customer base fell by 5,700 in the quarter."

These 34,500 customers most likely went to Freeview or Freesat. This has got nothing to do with Sky Atlantic

Darren Taylor said...

@campbellg I totally agree with your comment.

mercelous said...
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mercelous said...

On a different subject over on Digital Spy they have confirmed that on November 1st PBS will also be launching on Virgin Media channel 243. Virgin have also secured on demand content too. The channel slate is already on now!

sibod said...

campbellg:

Your quoting the OVERALL VM figures, which include mobile, telephone or broadband only:

TV Specific figures are:

1. That's 34,500 disconnections, not 36,000, and that was for the freeview equivalent M teir - I.E. no Sky, no HD.
2. That's 28,800 NEW customers, not 6,000. - and most of those were TV XL and TiVo
3. That's just 5000 net fewer customers this quarter, but more higher teir customers who are taking up Tivo and TVXL.

So, again, shut up already about Sky Atlantic! Virgin added another 180k HD customers who took up Tivo this quarter, so clearly Atlantic isnt the big draw you think it is. Even Sky are seeing take-up drop - see their last financials.

Square eyes said...

@Sibod

Love it, I have give up making those type of posts, because those people who are blinkered and are just focused upon the one thing just make idiotic claims which they know absolutely nothing.

David said...

@sibod

well said couldnt agree more

streaky_7 said...

@Sibod

I also agree. Clearly Atlantic and extra HD isn't the massive draw Sky and some VM customers thought. Yes I want it as I'm sure others do. But again VM is a business and have to weigh up what price it's worth. And clearly it's not worth what Sky want. So VM won't pay. I understand that. It's frustrating but understandable as a businessman.

Sky needs to be realistic and do a deal with VM to increase viewing figures and get the extra revenues from advertising not trying to fleece VM for the extra money!!

martine93 said...

@Sibod

I also agree. Very well said

Allan said...

Hi

There is a new channel comming

http://mediacentre.virginmedia.com/Stories/PBS-comes-to-Virgin-Media-22b9.aspx

harry_hitcch said...
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harry_hitcch said...
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Anthony said...

So, who's got the 15.2 update now?

I hear it's being rolled out region by region now.

streaky_7 said...

on a side note - how annoying the "who wants to be a millionaire" app/game is now chargeable!! 60p a go and £1 for 3 goes. oh well, just a bit of fun and only used it a couple of times but I hope thats not a sign of things to come - I liked the idea of some free games to play - esp for the little ones!

I know I keep saying VM are a business but its a very very cheap app/game - I could understand if they charged a one off 50p or something to activate it and you can then play it as much as you want but 60p every go?