Interview: Virgin Media’s Cindy Rose On The Connected-TV Explosion

2011 is going to be pretty transformative for the UK television landscape,” says Virgin Media’s director of digital entertainment Cindy Rose. “There’s a lot of next-generation television products coming to market.”

Chief amongst them, at least for now, is Virgin’s own high-specced new TiVo box, announced on Wednesday for shipping in the next few weeks in what is a significant upgrade for Virgin.

As well as a 1Tb drive, three TV tuners, a 10Mbps modem, enhanced navigation of on-demand and linear TV and a range of apps, Rose says Virgin’s box will next year get TiVo’s iPad app for two-screen control, individual user profiles for different viewers in the home and possibly a QWERTY keyboard remote.

Premium product

All this doesn’t come cheap – £199 plus £40 installation for existing customers, and a further monthly premium on the existing top-tier TV package.

We are premium-positioning,” Rose says, whilst demoing the box for paidContent:UK at Virgin’s London HQ. “We’re initially positioning this as a high-end product as a tier on top of TV XL – £3 more expensive than the standard TV XL subscription. However, we intend to migrate our entire television customer base over to TiVo as our standard product within a matter of years, and not many years. That means, undoubtedly, we will course-correct, refine and review packaging and pricing decisions as we go to make that happen.”

Virgin’s spokesperson makes a distinction between a Sky model in which he says customers own their box and must pay to fix it, and a Virgin model in which boxes are effectively leased from and fixed by the operator: “With such an important launch as this, we need to help people understand that, if something goes wrong, we swap it out for you. So we’re changing the terminology – we’re calling it an upfront rental fee.”

Whatever, the badge price looks unusually high. Yet there are parallels here with operations in the U.S., where TiVo (NSDQ: TIVO) Premiere, comparable to Virgin’s box, is sold at similar pricepoints as a standalone, desirable consumer product. “We will phase one (box) in and phase the other out and focus on moving our base over to TiVo as soon as possible,” Rose says.

‘Open’ to apps

Like rival YouView, Virgin’s TiVo includes an extension the operator is referring to as an “apps” platform, running on Flash. Out of the box, it offers YouTube (NSDQ: GOOG), eBay (NSDQ: EBAY), Twitter, Facebook and BBC iPlayer, though main catch-up TV is built in to the EPG itself.

As well as dedicated sections, those apps are also accessible from neighbouring EPG menus. “Every search you do on TiVo will yield results that include internet applications as well as the television assets,” says Rose, after making a one-click jump from the EPG’s Friends TV listing to Friends clips on YouTube.

“Important to say – the product we launch this month is not a static environment, it’s a very future-proof platform. There will be a constant drumbeat of new content, applications, features over time – we’ve got a pretty robust development roadmap.

“We’re launching with a handful (of apps); within 12 months, we’ll have hundreds. We needed to start with the household names.” But the system is not yet so open that there is a software developers kit, nor a sense of what criteria for third parties’ admission should be – that will come in 2011.

Nor is Virgin’s new box an app geek’s fantasy – though it unites VOD from its own broadcaster deals, viewers’ recordings and PVR-recommended material in one integrated EPG, the experience is primarily a familiar TV one for now…

“The first thing that comes up on the home screen is the TV Guide,” Rose says. “That is the primary mode of navigation today, although I don’t think that will always be the case. Search is the discovery tool of the next generation – my kids never look at the TV guide, I suspect that’s a trend.”

Subscription services welcome

In the States, TiVo Premiere also offers third-party entertainment services from Blockbuster (NYSE: BBI), Netflix (NSDQ: NFLX), Pandora, Rhapsody, MusicChoice, Live365 and more. So could Virgin’s Brit TiVo offer equivalents like Lovefilm and Spotify?

We’re talking to everybody – all those that you named and more,” says Rose. “We’re very open to all of them. It’s just a question of doing the right deal, making sure our customers actually want it – power to the people; we’re a Virgin company. We’ve got an online forum we’re moderating to ask what they want.”

FilmFlex is still the primary movie VOD partner going through Virgin – but Rose says that’s not prohibitive to someone like Lovefilm: “It would have to be the right deal commercially and add value. If Lovefilm came along and said ‘we’ve got something that adds to this’, we’d be the first ones to embrace them – we’re not precious about that.

Let a thousand flowers bloom! It’s a managed environment but we’re really open in terms of who we host on the platform – as long as the commercials are right and customers are interested in it.”

Local TV opportunity

Rose talks up the app opportunity as a content platform in the same way YouView CEO Richard Halton does: “If you’re a local broadcaster or a news media organisation or a local-language broadcaster, there’s the opportunity within the apps area to extend the experience in a meaningful way.”

Indeed, although the UK culture secretary, trying to implement a UK local TV ecosystem, has been advised that a linear local ecology is unviable, he has accepted the possibility that new local channels operating over IPTV could work.

“It’s a lot less cost-prohibitive,” Rose says. “There’s some really interesting opportunities around niche, local, local-language content that wouldn’t necessary be feasible as a broadcast channel but, as an application, via IP, it’s realistic. They would be in full control of their content; the opportunities are massive. I look forward to making some of that happen.

“The whole concept of what constitutes entertainment broadens out completely – it’s not just TV, movies, sport – it’s also games, social media, information and communication services. This platform allows us to expand the horizon.”

VOD monetisation elusive

Thanks to the power of its cable network, which has already been offering catch-up TV in the lounge for a couple of years now, Virgin Media (NSDQ: VMED) is one of the biggest UK VOD TV providers. But, after a limited trial showing ads to those VOD viewers, there is still no sign of fully and formally introducing pre-rolls across the system, aside from around music videos.

“It’s been a slow, steady build because we want to get comfortable with the level of consumer tolerance,” Rose says. “But we’ve had very few complaints. We’re starting to get a lot more interest from the ad community.

“This is a service that does 75 to 80 million VOD views a month – I expect to finish the year with 900 million views. The VOD platform is the third BARB-rated channel on Virgin – to not monetise it in some shape or form would be a real miss for us. We’re finding that people don’t mind if it’s relevant advertising and there’s not too much of it.”

Overcoming YouView

Rose sees “significant differences between us and the other” range of connected-TV options, notably YouView, the JV of UK public service broadcasters and ISPs…

“YouView, given its shareholding, is directed at a Freeview household that’s looking for a bit more and will major on public content,” she says. “The biggest differentiator for us is, we have Virgin broadband inside. The YouView box will provide an experience that’s only as good as the broadband connection that powers it – that can be variable, depending on the service provider that powers it, your distance from the exchange, what else is going on in the household.

“We don’t suffer from any of those limitations; we’re in a category of one. For the first time in our history, we’re able to demonstrate the power of the network to an entertainment experience in a single product.

We did offer to join the joint venture – they wouldn’t have us because we couldn’t accept the terms of their trademark license.

“We spent a long time talking to the partners. We tried very hard to find a way to make YouView coexist with our own experience. If there’s must-have content on YouView that’s only available on YouView, my customers have to make a binary decision – move away from Virgin Media and buy a YouView box or have two boxes in the house. We really struggled with that as a ‘public good’. But we were unable to come to an arrangement that will allow these two services to coexist on the same device. We’re reviewing our options.”

Despite earlier interest Virgin showed in joining YouView, its own TiVo box, which may yet trump YouView technology, now seems to render pointless the notion of joining the JV.

Cord cutting’s for geeks

The notion that upstart IPTV boxes like Boxee and Apple (NSDQ: AAPL) TV could disintermediate traditional TV deliverers is gathering pace. But incumbents like Virgin Media and Sky, rolling out their own equivalents, still seem powerful.

“I’ve been reading a lot about cord cutting coming over the pond,” Rose says. “The UK TV viewing audience is not ready to move away from broadcast television, because of the really strong public broadcasting ecology that exists here. So that’s going to appeal to a narrow technophile kind of audience. Google TV, the same holds true – I’m not sure the average viewer is ready to transform their television in to a PC, which is what Google TV does.

“There’s a place and an audience for that – it doesn’t hit our sweet spot, which is why we opted to go somewhere in the middle of the continuum with a classic TV experience but a whole lot more.”