Media Boy UK
06-02-2007, 00:50
Richard Branson relaunches NTL as Virgin Media this week, marking a key stage in the battle with Sky for control of the digital home.
Info from The Guardian (http://www.guardian.co.uk/)
The story of multi-channel television in Britain has been the unassailed dominance of Sky. As cable lurched from merger to bankruptcy and ITV burned a billion on the pyre of OnDigital, Murdoch's satellite star surged ahead. But as the millennium turned, so did the fortunes of BSkyB. First there was Freeview, Greg Dyke's low-cost alternative that captured the imagination of the digital refusniks; now there is "four-play", the opportunity for the ailing cable industry to bundle TV, broadband, mobile and fixed-line telephony into a quadruple package that could dominate the digital-age home.
The battle to lead this potentially lucrative new market is about to intensify as cable company NTL finally rebrands as Virgin Media and the UK's fourth-placed internet provider Tiscali unveils its own much cheaper TV service.
BT, meanwhile, is preparing a nationwide advertising campaign in the spring to boost take-up of its recently launched BT Vision service, which adds on-demand TV to the basic Freeview service.
BSkyB stole a march on its rivals last month with the launch of its own "triple play" offering - called See, Speak, Surf - while the satellite broadcaster is already levelling its guns at Virgin Media, characterising the rebrand as little more than a paint job.
The prize in this fight between the behemoths of the communications world is dominance of the digital home. In the short term, for companies like Sky and BT, the fight is an attempt to prevent an existing profitable customer base from defecting, by adding on new services - broadband in the case of Sky and TV in the case of BT.
For the heavily-indebted cable industry, however, the rebrand of NTL represents a last roll of the dice. If the industry cannot prove it can make a return from the billions that have been spent over the past two decades putting pipes in the ground across half the country, using Virgin's name and customer service expertise, it deserves to fail.
And the field is not closed to new combatants. Before the year is out, Carphone Warehouse, which revolutionised the internet market with last year's "free" broadband offering from TalkTalk, is likely to have taken its first steps into the provision of content.
"It's going to be carnage this year," says one seasoned new media executive.
"Dire for the companies involved as they scrap it out against each other and destroy their margins. But great for consumers."
Hence the war of words among the biggest players. "The bottom line is, we don't think a name change affects the fundamental issues they still have around product development, customer service and pricing flexibility and we think customers will see that," says Sky's chief financial officer, Jeremy Darroch, of this week's Virgin launch.
"That is just utter rubbish," hits back James Kidd, Virgin Media's head of marketing. "If it was all about a name change we would have changed the name on July 4 when we merged NTL with Virgin Mobile."
The company, he maintains, has spent the past six months replacing the customer service systems and processes that have been so obviously lacking within NTL and Telewest - which finally merged over a year ago. Cable has become synonymous with awful service, spawning such customer sites as NTL:hell. The delay in rebranding the business, which is expected to happen on Thursday, is a result of trying to make sure that this time it has got it right. "It's been really frustrating not to be able to go and get out there as Virgin earlier, from a marketing point of view," Kidd says. "But there is absolutely no point in doing that if you can't fulfil what Virgin stands for. A lot of learning has been taken from Virgin Trains where we did not have the option to do that and that was a nightmare, so to call it just a name change is just naive."
In the longer term, the company that controls the digital home will have the opportunity to understand a person's viewing habits. This knowledge will become increasingly valuable as the traditional linear or scheduled approach to TV is threatened by services such as video-on-demand, and advertisers scramble to find a way back into the home. The popularity of internet sites such as YouTube, experiments like 4oD and the iPlayer from established content owners Channel 4 and the BBC, the rise of Sky+ and sales of personal video recorders that connect with Freeview are all testament to the trend away from scheduled programming.
A broadband connection - or cable line - does not just work in one direction.
While it can be used to download shows, it can also be used to report back on viewing habits. In theory this could lead to advertising opportunities tailored directly to an individual viewer - although no one has any clear idea yet what these adverts might be like.
This is one of the few areas where Sky is at a disadvantage as its broadband service does not yet have any direct connection into its set-top boxes. While the next generation of SkyHD boxes will include such a connection, the broadcaster is starting from the back of the pack. It has, however, teamed up with Google, which is also very interested in the opportunities presented by TV advertising.
For Mary Turner, chief executive of Tiscali UK, this is the ultimate prize. "The next generation of advertising is going to be targeted advertising, so when you have that customer ownership you really understand the profile of users. When you are watching linear TV you have generic adverts, millions might be watching it but there is only a certain sub-section of that audience that is interested. The next generation of adverts will be profile-based so you get the advertising that you value and is relevant to you."
Tiscali entered the UK's TV market last year, buying up Video Networks. It was responsible for the Homechoice TV over the phone line service, which was a multi-channel and video-on-demand pioneer but never had the clout to move beyond its core base in London. Now that the price of equipment has plunged and BT has been forced to let rivals into its 5,500 local telephone exchanges to use its lines, Tiscali reckons it can take Homechoice - renamed Tiscali TV - across the UK's major metropolitan areas within the next year, covering 65% of the UK by next summer. The planned upgrade of BT's own network so it can deal with video by the end of the decade could allow Tiscali TV to go nationwide.
From March 1 Tiscali will start offering Homechoice's 50,000 existing London-based users its new TV and broadband service for just £14.99 a month - or three pounds a month cheaper than BT Vision and a lot cheaper than See, Speak, Surf which starts at £37 a month, as customers still have to pay £11 a month line rental.
Tiscali's basic service, which will be rolled out to new users in cities including Manchester, Birmingham, Sheffield and Edinburgh from June, includes 38 channels plus catch-up TV for BBC channels. Customers will also be given 100 hours a month to use on the platform's on-demand service which offers a host of music and other channels. From the summer the service will ship with a set-top box that includes a personal video recorder, just like BT Vision.
For £19.99 a month, customers get the same TV and internet service plus a phone line and free weekend calls to landline numbers. This is the same price as TalkTalk but while TalkTalk offers free calls to landline numbers on any day of the week, Tiscali is essentially giving away free TV. For a further £10 a month Tiscali offers an extra 27 channels and a thousand hours of on-demand TV. The service also has a library of about 1,000 movies available for 24-hour rental at up to £3 each.
The service does not include Sky One, although Tiscali TV has a pay-per-view service which offers new shows such as Lost and Desperate Housewives at 99p an episode.
"What we have observed is a gap in the market. That's the bit in the middle where people want more than the free TV service but they don't want the full-fat, linear pay-TV service that Sky and cable provide. That is where we fit in," says Turner.
Whether Tiscali can finally make a go of the old Homechoice service in the face of Sky's content stranglehold, Virgin Media's rebranding and BT's marketing clout, however, remains to be seen.
Info from The Guardian (http://www.guardian.co.uk/)
The story of multi-channel television in Britain has been the unassailed dominance of Sky. As cable lurched from merger to bankruptcy and ITV burned a billion on the pyre of OnDigital, Murdoch's satellite star surged ahead. But as the millennium turned, so did the fortunes of BSkyB. First there was Freeview, Greg Dyke's low-cost alternative that captured the imagination of the digital refusniks; now there is "four-play", the opportunity for the ailing cable industry to bundle TV, broadband, mobile and fixed-line telephony into a quadruple package that could dominate the digital-age home.
The battle to lead this potentially lucrative new market is about to intensify as cable company NTL finally rebrands as Virgin Media and the UK's fourth-placed internet provider Tiscali unveils its own much cheaper TV service.
BT, meanwhile, is preparing a nationwide advertising campaign in the spring to boost take-up of its recently launched BT Vision service, which adds on-demand TV to the basic Freeview service.
BSkyB stole a march on its rivals last month with the launch of its own "triple play" offering - called See, Speak, Surf - while the satellite broadcaster is already levelling its guns at Virgin Media, characterising the rebrand as little more than a paint job.
The prize in this fight between the behemoths of the communications world is dominance of the digital home. In the short term, for companies like Sky and BT, the fight is an attempt to prevent an existing profitable customer base from defecting, by adding on new services - broadband in the case of Sky and TV in the case of BT.
For the heavily-indebted cable industry, however, the rebrand of NTL represents a last roll of the dice. If the industry cannot prove it can make a return from the billions that have been spent over the past two decades putting pipes in the ground across half the country, using Virgin's name and customer service expertise, it deserves to fail.
And the field is not closed to new combatants. Before the year is out, Carphone Warehouse, which revolutionised the internet market with last year's "free" broadband offering from TalkTalk, is likely to have taken its first steps into the provision of content.
"It's going to be carnage this year," says one seasoned new media executive.
"Dire for the companies involved as they scrap it out against each other and destroy their margins. But great for consumers."
Hence the war of words among the biggest players. "The bottom line is, we don't think a name change affects the fundamental issues they still have around product development, customer service and pricing flexibility and we think customers will see that," says Sky's chief financial officer, Jeremy Darroch, of this week's Virgin launch.
"That is just utter rubbish," hits back James Kidd, Virgin Media's head of marketing. "If it was all about a name change we would have changed the name on July 4 when we merged NTL with Virgin Mobile."
The company, he maintains, has spent the past six months replacing the customer service systems and processes that have been so obviously lacking within NTL and Telewest - which finally merged over a year ago. Cable has become synonymous with awful service, spawning such customer sites as NTL:hell. The delay in rebranding the business, which is expected to happen on Thursday, is a result of trying to make sure that this time it has got it right. "It's been really frustrating not to be able to go and get out there as Virgin earlier, from a marketing point of view," Kidd says. "But there is absolutely no point in doing that if you can't fulfil what Virgin stands for. A lot of learning has been taken from Virgin Trains where we did not have the option to do that and that was a nightmare, so to call it just a name change is just naive."
In the longer term, the company that controls the digital home will have the opportunity to understand a person's viewing habits. This knowledge will become increasingly valuable as the traditional linear or scheduled approach to TV is threatened by services such as video-on-demand, and advertisers scramble to find a way back into the home. The popularity of internet sites such as YouTube, experiments like 4oD and the iPlayer from established content owners Channel 4 and the BBC, the rise of Sky+ and sales of personal video recorders that connect with Freeview are all testament to the trend away from scheduled programming.
A broadband connection - or cable line - does not just work in one direction.
While it can be used to download shows, it can also be used to report back on viewing habits. In theory this could lead to advertising opportunities tailored directly to an individual viewer - although no one has any clear idea yet what these adverts might be like.
This is one of the few areas where Sky is at a disadvantage as its broadband service does not yet have any direct connection into its set-top boxes. While the next generation of SkyHD boxes will include such a connection, the broadcaster is starting from the back of the pack. It has, however, teamed up with Google, which is also very interested in the opportunities presented by TV advertising.
For Mary Turner, chief executive of Tiscali UK, this is the ultimate prize. "The next generation of advertising is going to be targeted advertising, so when you have that customer ownership you really understand the profile of users. When you are watching linear TV you have generic adverts, millions might be watching it but there is only a certain sub-section of that audience that is interested. The next generation of adverts will be profile-based so you get the advertising that you value and is relevant to you."
Tiscali entered the UK's TV market last year, buying up Video Networks. It was responsible for the Homechoice TV over the phone line service, which was a multi-channel and video-on-demand pioneer but never had the clout to move beyond its core base in London. Now that the price of equipment has plunged and BT has been forced to let rivals into its 5,500 local telephone exchanges to use its lines, Tiscali reckons it can take Homechoice - renamed Tiscali TV - across the UK's major metropolitan areas within the next year, covering 65% of the UK by next summer. The planned upgrade of BT's own network so it can deal with video by the end of the decade could allow Tiscali TV to go nationwide.
From March 1 Tiscali will start offering Homechoice's 50,000 existing London-based users its new TV and broadband service for just £14.99 a month - or three pounds a month cheaper than BT Vision and a lot cheaper than See, Speak, Surf which starts at £37 a month, as customers still have to pay £11 a month line rental.
Tiscali's basic service, which will be rolled out to new users in cities including Manchester, Birmingham, Sheffield and Edinburgh from June, includes 38 channels plus catch-up TV for BBC channels. Customers will also be given 100 hours a month to use on the platform's on-demand service which offers a host of music and other channels. From the summer the service will ship with a set-top box that includes a personal video recorder, just like BT Vision.
For £19.99 a month, customers get the same TV and internet service plus a phone line and free weekend calls to landline numbers. This is the same price as TalkTalk but while TalkTalk offers free calls to landline numbers on any day of the week, Tiscali is essentially giving away free TV. For a further £10 a month Tiscali offers an extra 27 channels and a thousand hours of on-demand TV. The service also has a library of about 1,000 movies available for 24-hour rental at up to £3 each.
The service does not include Sky One, although Tiscali TV has a pay-per-view service which offers new shows such as Lost and Desperate Housewives at 99p an episode.
"What we have observed is a gap in the market. That's the bit in the middle where people want more than the free TV service but they don't want the full-fat, linear pay-TV service that Sky and cable provide. That is where we fit in," says Turner.
Whether Tiscali can finally make a go of the old Homechoice service in the face of Sky's content stranglehold, Virgin Media's rebranding and BT's marketing clout, however, remains to be seen.