TalkTalk lost 50,000 television customers in the United Kingdom in the six months to the end of March 2016. The company may attribute this to the fallout from a hacking incident but it faces bigger challenges. Despite its early rapid growth, the number of TalkTalk television customers has now fallen behind those of BT. Vodafone is also poised to enter the race.

TalkTalk lost 274,000 retail broadband customers in a year and attributes 95,000 of these to the hacking of its customer database, which it describes as a ‘cyber attack’ although this mainly appears to have been the result of weak security.

The number of TalkTalk television customers fell by 14,000 in the first three months of 2016 and 36,000 in the last quarter of 2015, wiping out a gain of 25,000 in the previous quarter.

After rapid initial growth based on a strategy of practically giving away television boxes to broadband subscribers, TalkTalk has seen gains level off and now decline, with churn now running at 1.4% a month.

“The TV base declined modestly during the year by 25k to 1,389k as we focused on deepening the engagement with our existing TV customers,” the company said in its preliminary annual results. It describes the growth from launch for years previously as “a remarkable success story”. 38% of TalkTalk broadband the telephone customers now take the television service.

However, the number of TalkTalk television customers has fallen, while BT piled on 321,000 over a year with a similar YouView proposition, boosted by its promotion of BT Sport. As a result, BT has now overtaken TalkTalk in terms of television customers. BT gained 66,000 television customers in the first quarter of 2016 for a total of 1.46 million.

BT and TalkTalk television subscribers to 2016 Q1. Source: informitv Multiscreen Index

TalkTalk is trying to look like a pay-television provider and tries to talk the talk. TalkTalk TV customers can now sign up and pay for Netflix on their TalkTalk bill. From June 2016, they will be able to subscribe to BT Sport channels in addition to Sky Sports channels, although if they are really interested in such things they might be better off with Sky or BT. The company has also launched TalkTalk TV store, based on its acquisition of the blinkbox business from Tesco, offering movies and television shows for rental or purchase on multiple devices.

Yet nothing in the TalkTalk annual results statement or presentation shows any regard for its customers as anything other than revenue generating units. There is no mention of a single programme or feature of the television experience in its analyst focussed commentary and no meaningful metrics of usage.

TalkTalk simply says: “Customers genuinely value the YouView experience that integrates free, pay, OTT, and premium channels, and we see benefits to engagement, NPS, and churn.” It continues: “In addition we have seen growing purchases of transactional video as customers become more comfortable and knowledgeable with the range of content on offer, with on-demand usage growing 20% year on year.”

Beyond that, there seems to be little understanding of why people might choose to get television from TalkTalk, other than as a cheap alternative to pay television from another provider.

Vodafone is now expected to enter the market with a television offering, which will only add to the pressure on TalkTalk to perform.

“Though it is trying to paint a positive picture, it is hard to see whether it will fully recover,” commented analyst Paolo Pescatore of CCS Insight. “Ultimately, consumers have lost confidence,” he said, adding that “the outlook is going to be challenging for TalkTalk”.

Baroness ‘Dido’ Harding is still hanging on to the reins as chief executive of TalkTalk but BT now appears to be pulling ahead. TalkTalk is now placed fourth among the pay television operators in the United Kingdom in the informitv Multiscreen Index.

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