Virgin Media Brings BBC iPlayer to its Third Screen - TV

| May 2, 2008 | Consumer Broadband Services - Europe | Competitive Update

| Analyst: Ben Tudor

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

April 30, 2008 – The BBC’s iPlayer VoD service will be available to 3.5 million Virgin Media customers on their TV sets, a first for both providers. This move is in keeping with the BBC’s stated mission to bring iPlayer to as many platforms as possible. However, iPlayer is easier to bring to a cable TV service than to ADSL, as the nature of cable allows for superior QoS and multicast functions. It is extremely unlikely that Virgin Media will enjoy exclusivity for very long, either.

Analytical Summary

• Current Perspective: Positive on Virgin Media’s deal with the BBC to carry iPlayer on its set top boxes (STBs), as the move puts iPlayer content on TVs for the first time. While VoD programming on STBs is not new, iPlayer has been a runaway success on the PC, and is likely to be highly popular as a TV format. The move also neatly sidesteps the problem of multiple users downloading multiple streams, which is causing some ISPs to complain loudly and bitterly (if not effectively).

• Vendor Importance: High to Virgin Media, as it gains both first mover advantage over other TV operations, and makes good use of its cable network. Adding iPlayer is a feather in the company’s cap, but it will also be a very useful test bed for the introduction of EuroDOCSIS 3.0 by the firm. iPlayer is also an excellent way of cocking a snook at BSkyB, a fierce rival which withdrew its programming from Virgin Media after the takeover of NTL.

• Market Impact: Moderate on the IPTV market in the UK, as the real story here is Virgin Media’s ability to offer VoD to consumers at will; iPlayer is merely the most high profile VoD name to sign up with Virgin. IPTV players in the UK struggle with the limitations of ADSL and pursue ADSL 2+ keenly, while continental neighbours are moving to VDSL and already have ADSL 2+ online in many areas. Despite the geographical limitations of Virgin Media’s coverage, cable is starting to look like a serious player in the UK next-generation TV market.

Recommended End User / Customer Actions

• BSkyB should play on the availability of its HD services, the geographical limits of Virgin Media’s cable network and the finer points of its Anytime service. While its STB Push-VoD service is constrained by Satellite’s broadcast nature, BSkyB’s marketing of broadband to its customer base could well be parlayed into an IPTV offering to add value to its HD satellite streams.

• BT should aggressively market BT Vision. The service is now mature enough to be upsold to BT Broadband customers as a ‘free’ STB that can be user configured. The next step is higher marketing spend to capture wavering Virgin Media customers.

• BT should press on with its cooperation with Microsoft on bringing BT Vision to the Xbox 360. While the number of Xbox360s installed in the UK is not huge by TV proportions, it is significant, and adding TV on demand to the device will also most likely spur more sales.

• Current IPTV players – and BSkyB – should press on with their adoption of ADSL2+ as a way of bringing higher quality and breadth of service to IPTV. ADSL 2+ and VDSL can compete well with Cable, and will be vital should Virgin Media begin adopting EuroDOCSIS 3.0 on a wide scale.

• Tiscali should proceed with its ADSL 2+ rollout with alacrity, concentrating on areas that show greatest interest in IPTV. The company should also lobby the BBC for iPlayer right, not least to take pressure off its network, which the company claims has suffered as a result of Web viewings of iPlayer.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Consumer Broadband Services - Europe | More information

Top