Kate Bulkley, Media Analyst.

A new word in competition

By Kate Bulkley

Broadcast News

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For Broadcast October 03, 2013

Virgin Media is set for Liberty-ification, says Kate Bulkley

Watch out for the next edition of the TV industry dictionary, because there might be a new word in it: Liberty-ification.

When Liberty Global bought Virgin Media (VM) for $23bn (£14bn) in February, analysts were waiting to find out how the US company’s influence would be felt. The cutting of 600 VM jobs made headlines, but the real glimpse of the future was the decision to add Netflix to VM’s line-up.

Adding one of most high-profile SVoD services seemed counter-intuitive – isn’t a monthly, relatively cheap Netflix subscription a competitor to a more expensive cable subscription? That’s the thinking of some pay-TV companies, including (for now at least) BSkyB, which launched its own Netflix-killer in Now TV.

Liberty’s reasoning is that there are some battles you can win, and some you can’t. Liberty Global’s Denver-based chief executive Mike Fries sees growth from offering more services (including Netflix, Sky channels and BT Sport) and faster broadband speeds. “We see ourselves in the connection business, not the curation business,” Fries told a CTAM cable marketing conference in Barcelona last month.

Fries was sitting on the same stage as former BSkyB chairman James Murdoch and admitted that Liberty will “never be as good” at creating and curating content as News Corp (Murdoch cracked a smile at that). While Fries said he’d like to see the $600m (£370m) cheque he writes to BSkyB every year fall (Murdoch shook his head), Liberty sees growth not in striking exclusive content deals but in ramping up broadband speeds far beyond the 100Mb it offers now.

Fries called Netflix “the big issue” for everyone in pay television, but the big lesson he has learned from its success is not how wonderful House Of Cards is, nor how important it is to have exclusive content – it’s about offering better functionality. “We are not good at three things,” he said. “Putting TV programmes on other devices; putting other content onto TVs; and we are also not as good as we should be with the user interface.”

He said that if Liberty can offer features such as a better search function, instant access to all kinds of on-demand services and linking multiple devices to the TV subscription, then the benefits promised by rivals such as Google’s Chromecast and Apple TV become less relevant.

Fries also gave short shrift to BT Sport, saying the new channel was raising the cost of sports rights in the UK for everyone, including consumers. This is a topic on which Liberty and News Corp agree, even as they continue to battle it out for customers in several European markets.

Fries also had one last card to pull. He spoke of a “broadband arms race” over the next three decades, where cable’s fast fibre pipes will beat rival offers from telcos and satellite companies.

Whether he’s right remains to be seen as there will be advances in mobile broadband and satellite offers, and telcos putting more money into upgrading their own pipes. But he did paint a picture of what Liberty-ification really looks like: 600 firings, a partial charm offensive with BSkyB, a focus on upping broadband speed and the evil eye directed at BT. Quite a recipe, huh?

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