The cable services provider Virgin Media had a difficult last quarter of 2008, with new customer sign ups dropping by a massive forty per cent.
The company posted losses of £50 million for the same quarter, which it said was due to the fact that it only managed to attract 14,800 new customers compared to 24,000 in the same period in 2007. At the same time Virgin Media has seen a fall in customers taking out the profitable broadband, TV and phone packages, with only 185,000 sales in the last quarter compared to 272,100 in the same quarter of 2007. However Virgin Media claims that "record numbers of customers" are now making use of its services and despite the economic crisis they have seen an increase of 57,100 on-net broadband customers, taking their total to 3.68 million. This is just 1.5% growth in user numbers at a time when Virgin has been advertising heavily and launching new services such as the new 50Mb package at the end of last year
Virgin Media also noted an improvement in tier mix, with a third of their users now subscribing to their next-generation (10Mb and above) services. Virgin Media also announced this week that it will be upgrading its 2Mbps broadband customers to a superfast 10Mbps service as it steps up its bid to become "the highest-quality broadband service in the UK". Indeed Virgin will begin migrating customers to the new connection in May, with prices for the 10Mbps package starting from £14 a month.
With Virgin’s broadband user numbers growing slower due to the economic downturn and increasing numbers of broadband users choosing to go to 3G Mobile broadband rather than tethered broadband. Recently the Office of National Statistics indicated that fixed broadband has started to fall for the first time and this trend looks will have an impact on the major operators. Expect to see aggressive price cuts to lure new customers from the major broadband ISPs such as BT and Sky during to spring of 2009 to compete with Virgin’s £14 a month 10Mb service.
At least Virgin has not yet decided to opt for Phorm like BT, however, there remain a number of legitimate revenue generating activities it could opt for now that it has deployed DPI (deep packet inspection) such as DNS and HTTP error monetisation.
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