Virgin Media Developing Non-DVR Products with TiVo Interface
Virgin Media will develop non-DVR set-tops and other products, seeking to expand use of the TiVo interface as the number of subscribers to the service nears a million, CEO Neil Berkett said on an earnings call. The U.K. cable operator ended Q2 with 939,000 TiVo subscribers, up from 34,000 a year ago, and was expected to hit the million mark this week, he said. Virgin added 261,700 net new TiVo subscribers in Q2, the company said. Virgin expects to release a TiVo iPad app in Q4 and will work to spread the interface across multiple products. Among these products could be a non-DVR set-top built by Cisco or Samsung that could sell for $155. The 500 GB TiVo DVR-equipped set-top was originally priced at $399.
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"As we go further out in time, there will be more efficient ways to deliver TiVo to a customer that’s not prepared to pay for a DVR box,” Berkett said.
The plans for spreading use of TiVo software followed Virgin boosting the service’s monthly fee to $7.70 from $4.60, an increase that achieved 90 percent compliance in Q2, Berkett said. TiVo accounts for 30 percent of Virgin’s cable customers and 65 percent of its premier package subscribers get the service, Berkett said. A premier subscription, which carries a $69.70 monthly fee, includes 60 Mbps and faster broadband downloads, a TiVo 500 GB set-top, 175 channels including 23 in HD, an extra HD box and mobile. Virgin also has a new premier collection promotion containing the same features minus the extra set-top and priced at $34.80. TiVo also is standard with Virgin’s basic tier that has a $38.72 monthly charge and includes 30 Mbps and faster broadband downloads, 75 channels including six in HD, and 500 GB set-top. A 1 terabyte TiVo-equipped set-top is part of a VIP offering that has a $228 monthly fee and includes a three-month free subscription to Spotify Premier.
Virgin is continuing to overhaul its infrastructure with a goal of bringing 30 Mbps and faster download speeds across the entire network within 12 months, Berkett said. It’s revamped 22 percent of its network so far and expects to spend $170.4 million on the project this year. The operator had budgeted $51.1 million for the upgrade in Q2, but spent $24.7 million, company executives said. Virgin ended Q2 with 4.15 million broadband customers, up from 4.04 million a year earlier, having added a net of 4,000 in the quarter, the company said. Subscribers to 30 Mbps and faster broadband downloads increased by 459,800 to 1.3 million due largely to the network upgrade program, company executives said. It had 3.1 million subscribers getting three services, up from 3.05 million a year ago, the company said.
In cable, Virgin lost a net 14,700 customers in Q2 on a 1.4 percent monthly churn to finish with 4.81 million subscribers. It lost a net 36,000 customers a year ago with a 1.2 percent monthly churn. Cable average revenue per user improved to $75.68 from $73.40 a year ago. Cable revenue rose 13.5 percent to $1.09 billion. Virgin’s mobile business added 53,900 net customers to end Q2 with 1.64 million, up from 1.34 million a year earlier when it signed up a net 83,200 subscribers, the company said. Mobile sales inched up 2.9 percent to $210.8 million. Virgin has no immediate plans to add Wi-Fi service to its offerings, preferring to partner with a mobile operator first, Berkett said. “We would be seeking a partner so we can offer a truly competitive service.” Overall, Virgin’s Q2 profit slipped to $100.3 million as operating costs jumped to $625 million and the company incurred a $775,000 restructuring charge. Revenue increased 4.2 percent $1.59 billion.