Virgin Media's On-Demand Usage
NMA - Jan 29th, 2009
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These figures from Virgin seem to tell two different stories. The reconciliation of these two stories may indicate whether VOD usage has reached a plateau or whether it will continue to rise. The first story concerns subscriber penetration, while the second concerns VOD usage among this group. In relative terms, ‘regular’ use of VOD on Virgin’s platform has always been popular. In Q1 2007 Virgin first reported that 43% of subscribers were using the service (graph 1). In Q3 2008 this had grown to 49% of subscribers, meaning that approximately 1.7m households were using VOD on a ‘‘regular’’ basis (2). However, this steady growth of VOD penetration conceals a more significant figure - once households start using VOD their monthly usage of climbs rapidly. In Q2 2007, the average number of monthly views per user was just 14, but by the end of Q3 2008 it had nearly doubled (3). Encouraging subscribers to make use of the VOD services they have subscribed to makes good business sense, since ARPU is higher amongst these users and subscribers in this group are far less likely to churn.
Between Q4 2007 and Q1 2008 growth in VOD usage slowed and remained more or less static between Q1 and Q2 2008. However in Q3, reach, penetration and consumption all experienced a sharp increase (1, 3 + 4). This may have been as a result of the iPlayer’s launch on Virgin and the subsequent marketing campaign to support it. It seems the iPlayer has increased VOD penetration and consumption across the whole of Virgin’s VOD services.
The BBC reports that the Virgin iPlayer received 11.7m views in September and now accounts for a 1/3 of all iPlayer programme ‘requests’. Significantly, that 11.7m is only set-top-box ‘requests’ for programmes and does not reflect the number of people in room, which is currently unmeasureable.
Working on the basis that PC-based VOD is generally one-face-to-one-screen, we may be under reporting the Virgin iPlayer, because we aren’t counting all the bodes in front of the telly, just the number of boxes that have ‘requested’ Top Gear, for example.
As a result of the iPlayer, more subscribers seem to be starting to delve deeper into the Virgin menus and re-evaluate services they had previously not considered. Filmflex, for example, experienced 15% month-on-month growth in August following a 9% growth in July. This is not to discount the original popularity of other Virgin’s VOD, but merely to illustrate that there may be a positive iPlayer halo effect on other VOD services.
It’s perhaps too early to determine the extent to which the marketing of TV iPlayer can be credited with contributing to overall VOD penetration and consumption. However, we can at least say there is a strong correlation between the two. Overall these figures, tracked over the course of nearly two years, paint a picture of increasing VOD reach (1) and frequency (3, 4) on the Virgin platform. We can probably expect overall consumer take-up of VOD to rise as platforms launch new on demand services. Sky, for example, has yet to launch a pull VOD service, but when it does the resulting marketing drive may drive VOD penetration and consumption on competitor platforms. We’re probably at the beginning of a decade long cycle of change in the TV industry and VOD consumption will be fundamental to this. These figures from Virgin may illustrate the scale of the change that faces us.
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