BT Vision Becomes Fastest-Growing Pay-TV Service

BT (NYSE: BT) Vision has become the fastest-growing pay-TV service in the UK, adding more customers in a quarter than BSkyB (NYSE: BSY) for the first time since launching more than four years ago.

The telecoms company’s pay-TV offering – which combines Freeview channels with sport, movies and on-demand content via broadband – said that the addition of the BBC iPlayer and a significant amount of on-demand content from major film studios had helped boost numbers.

BT Vision added 41,000 customers in the three months to the end of September, the most the service has attracted in a quarter for more than two years.

It also marks first time BT Vision has ever added more TV customers in a quarter than BSkyB since launching in mid-2007.

BSkyB added 26,000 pay-TV customers in the quarter to the end of September – well down on the almost 100,000 it reported in the same period in 2010 – while cable pay-TV operator Virgin Media’s total television subscribers declined by almost 6,000 in the period.

“It is the first time we have beaten Sky since launch and we have added more customers than both [including Virgin Media] combined,” said Marc Watson, chief executive of BT Vision. “It is very encouraging but we are not getting carried away. We are a young business with a lot to do.”

He admitted the growth is obviously from a much smaller base – BT Vision has 638,000 TV customers while BSkyB has more than 10 million and Virgin 3.76 million. Nevertheless, the addition of 41,000 represents a 6% increase on the 598,000 customers BT Vision reported at the end of June.

BT Vision’s subscriber numbers are also still some distance from early predictions of “2 to 3 million” originally set by former chief executive Ian Livingstone, but growth levels have picked up.

Watson said the growth in TV subscribers was down to doing the basics but better, including simplifying the packages on offer, improving the range of content and more marketing of the BT Vision service.

Earlier this year BT Vision introduced a basic tier charge of £4 a month – previously it had cost at least £7, usually more, to get a range of TV services – which Watson said has proved attractive, with many going on to take its “all you can eat” monthly option for £12.50.

Improvements to packages include launching a new subscription film service, which has partners including Warner Bros. (NYSE: TWX) Universal and Film 4, and on-demand TV channels from ABC (NYSE: DIS) and Warner Bros.

Watson said usage of video-on-demand services has seen explosive growth with viewers watching on average 46 or 47 programmes per month, on top of regular linear TV viewing.

BT Vision, which is part of the consortium of companies behind troubled broadband TV service YouView which aims to launch in April, added the BBC’s iPlayer service in the summer.

The company does not provide the level of customer metrics that BSkyB and Virgin Media (NSDQ: VMED) do in their financial updates.

However, Watson said average revenue per user, a key metric in determining how much money a company is making from each customer, is “steadily going up over time”. “These are good customers we are acquiring,” he added.

Watson said the amount BT Vision is paying to attract each new customer is “where it needs to be” and that churn, the rate at which customers cancel subscriptions, is “improving”.

“All our key performance indicators are doing well and where we want them to be,” he added. “Our net additions [of TV customers], are growing steadily, we are getting traction and awareness in the marketplace.”

This article originally appeared in MediaGuardian.