Virgin Movies - quality drop but still a premium price

It looks like Virgin Media are playing around with Virgin Movies On Demand content. I'm not sure if anyone else has noticed but I received an email this week from one unhappy VM customer, which I'm posting here in the hope that someone at Virgin Media will take note and perhaps explain what's going on and what they're going to do about it. (Thanks to Jay for bringing this to my attention.)

“We have been virgin customers for the past 5 years and have been quite satisfied with the service up until this point.  We have been using the Virgin Movies on Demand service extensively for some time now, watching as many as 4 movies a week from the "Out This Week" section at an approx cost of £3.99 per Standard Definition rental.“Prior to around four weeks ago everything was fine with the service, movies streamed fine and were clear, decent quality and had no problems such as pixelation.  We first noticed there was a problem when we rented a film called "The Mule" on 5th June and since then all of the Standard Definition films that have been added, have been of extremely poor quality, so bad in fact that we consider them unviewable. The picture quality is very pixelated, dark, grainy and out of focus, it's just awful to try and watch and is far below the acceptable level for standard definition as used for normal channels.“We have a 50 inch Plasma TV and have compared standard definition channels available through our TiVo Box, they are all vastly superior in quality compared with what we can now receive through Virgin Movies.  “We know that the problem is not with our TV or the TiVo box, because all the standard channels are okay and the same as before, it's only the Virgin Movies service. This can't be a streaming problem either, as all the movies that were made available prior to that bunch of "Out This Week" Movies, are all still available in a clear and decent viewing quality.“We reported this a few weeks back and specifically mentioned that it was relating to Movies on Demand. An engineer came out a couple of days later and said that there was not really anything that could be done about the problem with quality.  “Yesterday i spent a difficult two hours in a Livechat with a Virgin Media agent who was at time very argumentative instead of trying resolve the situation.  “It took a lot of effort and explaining for him to actually understand the problem. He did do comparisons in their office using the TV available, in the end he admitted that there was in fact a quality issue with the new movies available. After confirming the issue, he simply said that there was nothing that he could do about the matter.“When a customer is paying for a premium service such as a movie rental, they would expect at least the same quality as on the normal channels being broadcast, not the terrible quality material now being provided.  In order to get around this we have resorted to renting the HD versions, paying an extra pound per movie.  However, in the "Out Now Movies" there are maybe 30 rentals available and only about 5 are in HD.  “It used to be that around 80 - 90% of the films were available in SD and HD, but that's simply not the case anymore.  Not only are we unable to watch the majority of the content, and having to paying more when HD is available, the HD content is no longer as sharp and detailed as the HD movies used to be and we don't believe that they can be accurately described as high definition.“Having ruled out the TV, The TiVo Box and Streaming as being the cause of the problem, it can only be that the movies themselves have been encoded into much lower file sizes in order to cut down on bandwidth usage. We are surprised that this would be done for a premium rental service.“We are very disappointed in the situation, not only with the new low quality content, but also by the way this was dealt with by the engineer and the customer services agent.”.