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Summary:

Virgin Media thinks its new-ish TiVo (NSDQ: TIVO) set top box is a game changer. But, whilst the new box – with a big PVR drive, capability…

Neil Berkett, CEO, Virgin Media

Virgin Media thinks its new-ish TiVo (NSDQ: TIVO) set top box is a game changer. But, whilst the new box – with a big PVR drive, capability for over-the-top services and integrated broadcaster catch-up – is a large improvement on its predecessor, one year after launch, some aspects are more evolution than revolution…

Where are the apps?

In a lengthy meeting with City analysts on Wednesday, company executives re-iterated its belief that the box, which is designed to lure Sky customers and head off the emergence of connected TVs, is “an open platform”. But, if Virgin’s TiVo is so “open”, why does it still carry only 15 handpicked “apps”, compared with the 1,000 Samsung Smart Hub has in Europe? That question specifically was asked by an analyst from Cazenove…

“You will see a few apps every month,” he was told by company COO Andrew Barron. “They will be heavyweight apps, not just fodder. It’s easy to publish all sorts of things to it, because it’s got Flash – but we want to the real heavyweights.”

It was a skilled response to what analysts are now realising – Virgin’s TiVo platform is a step-change from its forebear but still a way’s away from rival boxes and TV sets in this regard, and the big-platform-operator way of thinking is notable by its presence.

Virgin claimed viewers called up 2.4 million app sessions in November, spending 21 minutes a time. The showcase apps are iPlayer and Spotify, whose content tends to run long.

iPad controller delayed

For all its advanced additions, the TiVo box, which comes with an additional £5 monthly premium, still does not include basic features of its predecessor like BBC Red Button, which is part and parcel of free-to-air Freeview. Meanwhile, the iPad controller promised pre-launch more than a year ago is still absent. Again, an analyst quizzed Virgin Media on Wednesday.

“We’ve got it, it works,” Barron told him. “Ninety-nine percent of companies would have rolled it by now – it’s stable, impressive – but we haven’t…

“We wanted to make sure early adopter enthusiasts will love it – but that, when it hits, it goes mass-market quite quickly and is not viewed as some flaky application for enthusiasts but is polished and doesn’t generate calls to support. It shows you our philosophy – we’re a mass-market company.”

This is far from the product development method which many developers nowadays favour – ship first, iterate later.

To premium and beyond

If Virgin’s TiVo hasn’t yet got to grips with “open” as many internet afficonados recognise it or with the full-blown revolution in over-the-top connected TV services that is coming in to view, it is, however, ushering in a step change in viewing habits…

Half of viewing on TiVo is now carried out through its My Shows section – that is, shows recorded on its PVR and personalised recommendations. Virgin, whose TV box has three tuners for simultaneous recording as well as broadcaster catch-up services, is spearheading a big rise in timeshifting, now showing 90 million VOD views per month from customers.

It’s a continuation of a trend the previous V+ box, as well as the rise of broadcasters’ own catch-up brands, had created before it. But, if TiVo is still far opening the gates to over-the-top operators in reality, it is proving to be an excellent platform through which to watch VOD on Virgin’s terms.

The company’s strategy is to frog-march customers from Virgin’s existing broadband and TV services to TV upgrades (TiVo) and faster broadband (speeds are being doubled), while continually charging more for the privilege.

It is working – average customer revenue for Virgin’s TiVo customers is £60 per month compared with £45 for regular customers. Virgin’s TiVo adoption doubled in Q4, taking it up to 435,000, it reported on Wednesday.

But Virgin must be mindful that continually ratcheting up price in this way won’t simply turn customers away.

In five years’ time, CEO Neil Berkett told analysts, Virgin will have retired its ghastly old Liberate system, will have all its customers on TiVo and will be scouting for “son of TiVo”.

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  1. Virgin’s TiVo adoption actually almost tripled for the quarter increasing from 162,000 TiVo subscribers in Q3 to 435,000 in Q4 — a 270% increase. 

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    1. Yep, that’s the installed base – sign-ups (ie. adoption) doubled.

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