Virgin Media began trading in early 2007, as a result of a merger between cable operator NTL:Telewest, and acquisitions of the VirginNet internet service provider, and Virgin Mobile. At launch, the new company heralded itself as being the first single provider of quad-play' (four-service) media in the UK. It has a strong marketing campaign and its broadband service in particular is popular with British customers, with the second largest subscriber base in the United Kingdom.
Virgin Media's products are predominantly intangible services. The company's product range includes landline telephone services, broadband internet, digital television, and mobile phone solutions. From the company's beginnings as two small cable companies (International CableTel, latterly NTL, and Croydon Cable, latterly Telewest), a series of mergers & acquisitions have seen the company develop into one of the leading media providers within the UK.
Virgin markets itself largely by publicising its unique selling points areas in which BSkyB, the largest pay-tv company in the UK, and Virgin's main rival cannot compete. These areas include On Demand' video through a customer's set top box, which can be paused, rewound, and fast forwarded, just like a DVD. This can is possible as it is directly delivered down the cable to the customer from the nearest junction box, with no contention from other factors. BSkyB, or Sky Digital, cannot compete with this as they operate a satellite broadcasting service, and the technology does not exist. Other unique services include the purchase of films and music video content, which can then be viewed for 24 hours, like a rental'. This can be called up instantly to watch when the viewer likes. Again, this technology does not exist via satellite broadcasting.
One of the other main unique points about Virgin, and one which encourages so many people in its service area to consider it over Sky Digital, is the fact that the cable for the services is run directly into the customer's home, with no satellite dish required on the side of the building. Some people view these dishes as unsightly, and some blocks of flats and council planning regulations prohibit their erection in simple circumstances.
However, one of the main drawbacks to Virgin Media's products is that for a large part of their offering (TV & broadband) to work, the customer must be within Virgin's cabled area'. These are areas that have the underground cable network installed. Currently around 55% of homes in the UK have access to the cabled area, whereas anyone with line of sight into the sky is able to access Sky Digital's services. Virgin is planning to combat this with the introduction of a Freeview TV service to those out with its cabled area, and the testing of a TV-over-internet' system which would be available to anyone in the UK with broadband. It also offers broadband and phone services to customers via a BT line, without using its cable technology.
Virgin Media's pricing strategy is mainly competition-based, and relies heavily on offering bundles' of its services - such as 2 services for £20 (TV & Phone), or 3 for £30 (TV, Phone, Broadband). This strategy is in keeping with Sky's pricing structure, which it developed after following Virgin in the multi-media market.
Another pricing strategy deployed by Virgin is premium-pricing aimed at higher-earning consumers who are interested in having the best of everything. Their VIP' package gives the customer Virgin's top level package in every area, including sports and movie channels, for £85 per month.
Virgin Media sees both these pricing strategies as being a simple way to entice potential customers. The business also sees the attraction to a consumer of having all their home media services provided to them by the same company, with only one bill per month, and one point of contact.
Virgin Media's services...