UK cable telco Virgin Media’s average customer take climbed to a record £47.51 ($76.61) per month in Q4 – but that could boom when it launches TiVo (NSDQ: TIVO) and if it finally gets its quad-play strategy ticking.
TiVo users must pay £199 ($320.9) for the broadband-enabled TV box and an extra £3 ($4.84) per month on top of the most costly, XL TV package. Right now, only 12 percent of customers take mobile as well as TV, broadband and telephone.
“We’re a triple-play and we have a bit of mobile on the side,” Berkett conceded to analysts Thursday, saying quad-play ARPU could hit £80 ($129.01) per month. “We haven’t truly implemented the smartphone and tablet in to our offering. Therein lies the huge opportunity that exists for us.” He will start offering free mobile-to-landline calls for Virgin-to-Virgin households.
Berkett reckons Virgin has “a long-term sustainable network advantage” because its cable network beats copper-wire telcos with the UK’s fastest broadband speeds and integrated TV, in wired areas at least.
That already means VOD succes on its existing boxes – 64 percent of customers now use their VOD programmes regularly. But many of those existing boxes are horrible pieces of technology, using archaic software from Virgin’s ntl legacy (mine has malfunctioned since I got it a year ago). So Virgin is taking on the more powerful, cleverer TiVo Premiere for the long term.
It will charge customers a hefty one-off fee and an ongoing monthly premium, but the company expects TiVo to become its standard box in some years’ time. Existing customers are being preferenced in a staged roll-out, coming to new customers in Q2. But many die-hard users of TiVo Series 1 devices are livid that, whilst throwing in with Virgin, TiVo is ending support for their boxes, which they bought about nearly a decade years ago.
Berkett thinks TiVo could even help tick Virgin’s “mobile” box. “In the second half of the year, we’ll start running TiVo applications on remote devices,” he said. “There is a (TiVo) iPad app available today which we will launch in the second half of the year.
“It will be our middleware in a few years time, It will be the glue that brings the PC, TV and mobile screen all together.”
The TiVo can host third party services’ apps and Berkett says he wants “no walled gardens”. “We have no fears about bringing a Blockbuster (NYSE: BBI) or a Lovefilm in to Virgin.
“The application and content is the key to the wallet but, in our case, it is not the wallet.” Translation – unlike BSkyB (NYSE: BSY), Virgin is no longer an integrated network-and-content company; it’s just a network. “It allows us to be completely open versus our competitors, who need to be closed.”
Virgin has been talking with Spotify about hosting its music player on TiVo. If Berkett’s openness about his TV platform extends to his other devices, that could also yield a cross-sold mobile and broadband deal for Spotify through Virgin.
Q4 revenue broke £1 ($1.61) billion for the first time, swinging Virgin Media (NSDQ: VMED) in to profit of £37.1 ($59.83) million.