Multi-play adoption highlights content pitfalls

Figures released on Thursday reveal that European consumers are abandoning fixed line services of incumbent carriers in droves and defecting to rival triple play providers.

Both Deutsche Telekom and France Telecom have suffered heavy losses to rival players some of which are offering multi play or bundled services.

However, the fall out between Virgin Media and Sky in the UK on Thursday also highlighted the intense competition going on in the multi-play market itself.

Virgin Media customers found themselves without access to Sky’s basic channels on Thursday morning. The channels stopped airing on Virgin after talks broke down between the two companies.

Virgin claims that Sky had demanded that the fees for these channels be nearly doubled, while Sky maintains that its offer stood at £0.03 per customer per day.

Whatever the case, Virgin subscribers have found themselves without Sky One, Sky Sports News, Sky Travel and Sky News, which air such shows as the Simpsons, Lost, 24, Nip/Tuck and Battlestar Galactica.

A Virgin Media spokesman told telecoms.com it is no secret that the market is increasingly competitive and cutthroat, adding that the operator is focusing on acquiring higher value bundled subscribers.

“We’ve been focusing on integrating our cable businesses and will now do the same with mobile to get into the quad play market,” he said.

Virgin will also concentrate heavily on building its video on demand content and services, the spokesman added, dismissing the argument that service providers that also own a majority of the content, such as BSkyB, have the edge in the market.

However, he conceded that despite the apparent shift to adopt multi-play services in Europe, the infighting amongst operators and content providers could see some consumers moving back to single service subscriptions.

“It obviously makes sense to bundle services, say broadband and telephone,” he said, “but there may be the compulsion to get another service [such as TV] elsewhere.”

Aleksandra Bosnjak, analyst with Ovum, said that while Virgin may not need Sky’s basic channels (which have lost 22 per cent of the viewing market share since 2003), Sky’s programmes are a big part of Virgin’s most popular package and could prompt churn rates that Virgin cannot handle at this time.

Meanwhile, Gartner analyst Susan Richardson, who said that consumer inertia meant subscribers were unlikely to leave because of the loss of Sky One, believes customers may well be annoyed that they are paying the same price for less channels and content.

Bosnjak said that the broadcasting and media industry is suffering as a result of the intense proliferation of audiences and content distribution channels. “Virgin will not give up and while Sky has the advantage in content now, Virgin will take an aggressive approach – in fact it has been acquiring a considerable amount of content,” Bosnjak said.