Virgin Media launched today and from what’s been said, they’ve got Sky firmly in their sights.
Unfortunately, it does feel like there’s a lot of spin going on at present. A war of words is all very entertaining for a while, but that doesn’t help Virgin when Sky are still clearly in the driving seat.
The Media Guardian reports that Virgin is keen to go after the ‘soft underbelly’ of Sky’s overpriced sports and films. It’s soon going to announce plans to exploit this weakness.
“Sky overcharges customers right now for sports and movies – they continually raise their prices,” the Virgin Media chairman, Jim Mooney, said today.
“We think that’s a weakness we can exploit. Within that space we are going to exploit that weakness where Sky has over 5 million customers right now.
Virgin believe that customers are being offered too much, and being charged for it, when what they really want is ‘a la carte’ choice – and of course, Virgin Media are just the company to provide it.
It sounds as if Virgin have a score to settle with Sky:
Virgin has not given up its fight with Sky over ITV. Sky’s acquisition of a 17.9% stake in ITV in November scuppered Virgin’s attempt to merge with the commercial broadcaster.
Mr Mooney repeated accusations that Sky has behaved anti-competitively and said its swoop would “never have been allowed” in most countries, including the US.
OK so we have a small insight into at least one reason why Virgin might want to thrash Sky.
According to Brand Republic, the battle between Sky and Virgin continues to grow.
Firstly, Sky have slashed their carriage deal, meaning that Virgin now only get 10p instead of 40p if a Sky customer takes a package that includes Virgin’s range of channels. Secondly, Sky is refusing to run Virgin’s ads on its network.
Nevertheless, Mooney is confident: “Our competitors have never had to deal with the Virgin brand coming down their tailpipe before and deal with the competition of customer services getting better and better week after week.”
Sky may be Virgin’s main rival, but there are plenty of other players – some big, some small – that are planning assaults on the British media landscape. The Guardian has published a roundup of how the rivals compare: Virgin Media, Sky, BT, Orange, Tiscali, Carphone Warehouse, and Vodafone. From this comparison of near-alike packages, Virgin does seem to have the more expensive service.
The Guardian have also quoted a figure of £85 per month for Virgin Media’s VIP service. They claim that many of the bundled packages look similar to NTL’s old offerings – not surprising really.
E-Consultancy looks at some of the reactions to Virgin Media.
Jupiter telecoms analyst Ian Fogg says that their quad-play service isn’t unique. “Local loop unbundling, the success of DSL broadband, mobile virtual network operators, carrier pre selection and wholesale line rental have changed all of that. Virgin has to innovate.”
Web User has picked up on more opinion:
“Perhaps the biggest question is how will Sky react to the Virgin Media launch… it can already claim to cover more telephone exchanges than Virgin Media covers with its cable network,” said Jason Lloyd of Moneysupermarket.com.
“This battle can only benefit consumers in the short term, but in the medium term it will reduce consumer choice,” said Lloyd.
Chris Frost of uSwitch said: “97 per cent availability [of cable] by the end of 2007 is effectively doubling the current cable reach, and there remains a question mark about how this will be achieved. However, if it is, it will bring new competition to non-cable areas that for the first time will be presented with a choice of providers for premium movies and sports.”
Meanwhile, Neal McCleave, head of media services at Tiscali, said, “The Virgin campaign is well-presented but for broadband, phone, mobile and TV it is quite a significant investment at £85 or £125 a month and the choice of packages is complicated. We recommend that consumers look carefully at the details – there are better value double or triple play packages. Tiscali is offering Broadband for £14.99 with free digital TV and triple play broadband phone and TV, including telephone line rental for £19.99.”
Unsurprisingly, Tiscali are focusing on Virgin’s most expensive packages. Tiscali really don’t have the reach at present to be a serious national threat to Virgin.
Though there’s been plenty of hype, the new service isn’t really unique or revolutionary. Virgin Media are providing a service that a number of other providers are, and in the end it really will come down to content, customer service, and availability.
Sky are dominant. BT are near-ubiquitous. The other players may be minnows but they all have potential. Does the consumer win, or simply get confused? Whatever happens, Virgin will need to deliver, and fast, if their promise of a better service than their rivals is to become a reality.