Virgin Media: ‘TiVo will beat Sky+’

A new report on UK cable operator Virgin Media’s prospects (from investment bankers Morgan Stanley) says that TiVo’s functionality will make life very hard for YouView or BSkyB. Virgin’s senior staffers say that their TiVo box, now rolling out to its customer base, will beat to the punch the UK’s digital terrestrial service YouView and that BSkyB will be hard pressed to match TiVo’s functionality.

“Virgin plans to migrate the whole base to TiVo over next few years, so it needs to be suitable for technophobes as well as technophiles,” says the report. “It remains a ‘religious principle’ within the company that they will never give TiVo away for free.” The report adds that the cost, via IP/royalty payments to TiVo, are not that different to those paid to its previous Middleware supplier.”

TiVo is supplied with three tuners to enable two programmes to be recorded while another being watched. The bank’s report says: “Virgin believes TiVo has better functionality versus Sky: Search (brings up results from all platforms available on the box – TV catch-up, VoD, YouTube, iPlayer – and could eventually replace traditional ‘TV Guide’ browsing); a Recommendation engine; backwards EPG; a truly on-demand VoD library; dedicated bandwidth for on-demand; a 1TB DVR which is bigger than most Sky boxes; includes apps like Spotify or CNBC; and has a dedicated IP pipe for OTT services which, in theory, could be used for a deal with a provider of content direct to the customer. YouView (the JV between the BBC, BT, TalkTalk and the free broadcasters) could have more limited pay content and may not have same search and recommendation functionality. In addition bandwidth will be more variable until [BT’s fibre-service] Infinity is more widely available.”

Virgin Media suffered a Q2 downturn in subscriber numbers (down 36,000 in total, down 13,000 broadband) but told the bank that Q2 was typically a poor quarter, not helped by student disconnects, and this year’s double bank holiday (the Royal Wedding and May Day) had impacted business. The bank’s report says that Virgin’s churners are concentrated in the lower tiers, while the operator continues to concentrate on triple and quad-play growth.

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