Neil Berkett’s Virgin Media (NSDQ: VMED), in its earnings for the first three months of the year, hailed higher average revenue per customer and a reduction in subscription cancellations – but broadband sign-ups are half what they were last year, leading to a rare climb-back in income from its ISP business.
— Broadband: Sign-ups slowed to just 47,300 from 88,400 in the same quarter last year, despite Virgin’s heavy marketing of its trump card – fibre optic speeds. Revenue crept one percent to £3.97 million. But Virgin is not alone – Sky broadband sign-ups in the same period slowed from 220,000 to 130,000. Still, three quarters of new Virgin ISP subscribers now opt for 10Mbps and above – so appealing is it for Virgin to have customers on fast packages, it’s upgrading all 2Mbps customers to the higher spec from this month.
— Web-TV: To differentiate itself, Virgin is adding broadband services like data backup and, soon, music subscription. News of another was buried in today’s market announcement: “Looking further ahead to the next generation of home entertainment, we are working on capitalising on technological convergence by developing a prototype interface that combines traditional broadcast TV content with on-demand programming, web-based entertainment and interactive features in a simple and user-friendly format.” It’s unclear whether this means Virgin is joining the BBC’s Project Canvas, developing its own version or simply updating its flaky EPG, which has tried web content before but shown it to be a slow experience.
— TV: Subscriber sign-ups were down from 36,800 last year to 30,600, totaling 3.65 million. VOD is again being hailed as the differentiator (see yesterday’s post), with usage rising to 53 percent of customers from 46 percent last year, and clocking an average 55 million views, up from 36 million last year.
— Telephony: Remember when Virgin was going to be a “quad-play” provider? Well, it’s actually happening how. Unusually, mobile was this quarter’s shining light, with contract customers growing 63 percent to 712,300 in the last year and contract revenue up 63 5.8 percent, thanks to cross-selling to subscribers. Land line revenue was virtually flat.
All in all, Virgin swung to a £13 million operating profit from last year’s £2 million loss, though revenue slid 1.1 percent to £936 million.