Virgin announces Q2 2008 results

Virgin Media this morning has posted its second quarter's results. Churn is down again, overall TV subs are up by 24,800 (in what is normally the weakest quarter for pay TV) but ARPU (the revenue per customer, not the guy who runs the Kwik-E-Mart) is down. The full press release can be found here, and here's the piece from the press release specific to TV services:

Total TV net additions were 24,800 in the quarter (Q1-08: 36,800; Q2-07: 2,200). Net additions were up compared to the same quarter last year which was negatively affected by BSkyB’s removal of its basic TV channels from our platform.
During the quarter, we launched the BBC’s iPlayer service on our VOD platform offering hundreds of hours of BBC “catch-up” content. Virgin Media is the first TV platform to make BBC iPlayer available in full screen picture quality directly to its 3.4m digital TV subscribers. Developments like this give VOD a new impetus and help establish on-demand as a genuinely mainstream TV service.
Customers are increasingly using our VOD services. On a monthly basis, 1.6m of our TV customers are now using VOD, representing a reach of 48%. Average views per user per month in the quarter were 24 compared to 14 a year ago. Average monthly views were 38m in the quarter, up 5% on the previous quarter and up 92% on the same quarter last year.
During the quarter, we added 60,700 V+ DVR subscribers to reach an installed base of 424,900. This represents a penetration level of just 13% of our digital subscribers and so the growth opportunity remains strong.

The last piece is perhaps the most interesting to readers of this blog; Virgin added almost twice as many customers to the world of HD this month than Sky, and now has an HD-capable 425k homes compared to Sky's 490k . But there ain't a single mention of HD services in the press release which means anyone hopeful of more channels in 2008 is heading for disappointment. What's more, the success of the VOD service will reinforce VM's belief that strategically it's onto a winner investing solely in On Demand services when it comes to TV, especially as the take up of Sky's HD premium package has slowed with just 33k new subscribers this quarter. Whilst I'm not convinced that there's sufficient demand for 50mb connectivity at home unless it's coupled with some fabulous new content stream that needs that speed, Berkett and co are unlikely to change their thinking based on these results or Sky's this quarter.
Go on Virgin, prove me wrong and give us at least C4HD before Christmas...

Virgin first quarter results

Headlines (with year-on-year comparisons) :

• Continued customer and RGU growth
• 204,300 total RGU net additions (Q1-07: 145,100)
• 4,900 on-net customer net additions (Q1-07: 46,900 net disconnects)
• On-net churn declined to 1.2% (Q1-07: 1.6%); lowest since 2004
• 88,400 on-net broadband net additions (Q1-07: 87,900)
• 29,000 on-net telephony net additions (Q1-07: 63,400 net disconnects)
• 36,800 TV net additions (Q1-07: 36,100)
• Record triple-play penetration of 51.3% (Q1-07: 42.9%)
• Operating loss of GBP 5m (Q1-07: GBP 15m)

More details on the cable TV side of the business from the official press release:

Total TV net additions were 36,800 in the quarter (Q4-07: 61,100; Q1-07: 36,100). As anticipated, this was lower than in the previous quarter partly due to alterations to acquisition offers in order to emphasize higher priced TV tiers.

1.6m of our TV customers are now using our VOD service on a monthly basis, representing a reach of 48%. Average views per user per month in the quarter were 24 compared to 23 in the previous quarter and 11 a year ago. Average monthly views were 36m in the quarter, up 10% on the previous quarter and up 155% on the same quarter last year.

In April 2008, we launched the BBC's iPlayer service on our VOD platform offering hundreds of hours of BBC catch-up content. Developments like this give VOD a new impetus and help establish on-demand as a genuinely mainstream TV service.

During the quarter, we added a record 101,800 V+ DVR subscribers to reach an installed base of 364,200. This represents a penetration level of just 11% of our digital subscribers and so the growth opportunity remains strong. In addition, based on our experience, DVR subscribers and VOD users are less likely to churn.

The mix of TV subscribers improved during the quarter, with growth in the percentage of subscribers on our top basic tier. We believe that this growth continued to be positively affected by increased VOD content and usage and the addition of the Setanta Sports channels into our top basic tier.

And on a positive note, according to Reuters today Berkett has revealed that Sky and VM are in serious discussions about the return of the Sky basics to Virgin Media