With little organic growth to speak of, Liberty Global is consolidating its cable assets across Europe. Keeping track of the numbers is certainly a challenge. Liberty Global lost a total of 805,700 enhanced video subscribers in twelve months, after reclassifying of 900,000 in Germany as basic video customers. Meanwhile, after five years of little change, Virgin Media added 310,000 television subscribers in the last quarter. Where did they come from? In a word: Ireland.
Just to maintain its market share a subscription company has to compete in the market to attract new customers to replace those lost through churn, which amounts to 14.5% of customers a year in the case of Virgin Media.
The cost of acquiring each new customer can be considerable, for little apparent gain. At the end of 2014, Virgin Media had 3.76 million digital video customers, which is little more than it had at the end of 2009.
Up to then, it had been growing digital television customers within its analogue subscriber base. More recently the focus has been on upgrading digital customers to its TiVo service.
Another way of achieving growth is through consolidation — acquiring customers from another company.
Now part of Liberty Global, Virgin Media has acquired a controlling interest in UPC Ireland from within the same group. Virgin Media now conveniently counts its customers in both the United Kingdom and the Republic of Ireland. As a result it has finally broken through the four million mark.
Sky, its main competitor, has long counted customers across the United Kingdom and Ireland. It reports 11.88 million in these territories, although it no longer breaks out television subscribers.
Virgin Media now claims 4.07 million ‘enhanced video’ subscribers, up from the previous figure of 3.76 million in the United Kingdom. However, the consolidated figures are actually down 23,000 on the previous quarter and down 4,000 year on year.
Without the addition of subscribers in Ireland, Virgin Media lost 11,300 video customers in the first quarter of 2015, while UPC in Ireland lost 11,700 in the same period. So the impression of growth may be an illusion.
While the assimilation of UPC customers in Ireland is a logical move, it means that Virgin Media has two different advanced television platforms in play. In the United Kingdom it has been advancing with TiVo, while elsewhere UPC has been developing its own Horizon platform.
The UPC brand name has been retained in Ireland for the moment. It remains unclear whether it will continue to operate separately or will be brought under the Virgin Media brand. Virgin Media appears committed to TiVo for the present.
At the end of 2014 Virgin Media reported 2.5 million TiVo customers in the United Kingdom, while UPC reported 113,000 Horizon customers in Ireland.
In the first quarter of 2015 the combined number of TiVo and Horizon customers in the United Kingdom and Ireland rose by 115,000 to 2.8 million, accounting for just over two thirds of Virgin Media video customers.
Meanwhile in the Netherlands, the Liberty Global group is integrating UPC under the Ziggo brand. Here it added 44,000 Horizon TV subscribers, for a total of 375,000 out of 3.37 million enhanced video customers. On a comparable basis the combined enhanced video customer base declined by 19,200 in the quarter but is relatively unchanged over a year.
In Belgium, Telenet reclassified 138,400 basic video customers as enhanced video subscribers, resulting in a net quarterly gain of 111,500, although on an organic basis the increase was only 8,000.
Unitymedia in Germany saw an organic increase of 32,500 enhanced video customers to a total of 1.39 million, with 326,000 of them now taking the Horizon service. A further 5.13 million take basic video services. The company has reclassified 916,900 subscribers as basic video subscribers, meaning they pay fees for access or a set-top box but do not pay for encrypted video services. That resulted in a quarterly loss of 884,400 enhanced video subscribers overall.
Across the Liberty Global footprint 3.7 million subscribers now receive ‘next-generation’ TiVo or Horizon television services, up from 2.7 million a year previously.
The Liberty Global group now has 15.11 million enhanced video customers worldwide. The number has fallen by 805,700 over a year, largely attributable to the reclassification of basic video subscribers in Germany. The number of enhanced video subscribers also fell slightly in the United Kingdom, Ireland, The Netherlands, Switzerland and Austria, offset by gains of 111,500 in Belgium.
On an organic basis the number is relatively unchanged, up just 7,300 over a year.
Liberty Global ranks third among corporate groups in the informitv Multiscreen Index. While relatively static television subscriber numbers suggest lack of growth, Liberty Global is concentrating on consolidating its cable assets and upselling next generation video services, with considerable potential for higher revenues.
Keeping track of all these changes globally, through mergers and acquisitions, reclassifications, adjustments and rebased numbers, is a major undertaking.
With consolidation continuing across the industry, it can be difficult to distinguish organic change in subscriber numbers from changes in accounting policies. That makes independent objective analysis all the more important.
The informitv Multiscreen Index of a hundred leading services worldwide aims to provide an indication of overall change in subscriber numbers on a comparable basis.
Where a company acquires subscribers through corporate consolidation or redefinition of accounting policies this will be reflected in our figures, although this need not necessarily imply growth or reduction in numbers in real terms.
Despite prevalent pessimism about the prospects of pay television, the April edition of the Multiscreen Index report shows that subscriber numbers across the index rose by 5.11 million or 1.42% in the last quarter of 2014.