Virgin Media customers unhappy at blanket £3 per month price rise across XL TV package to fund BT Sport Europe, but does it underline a wider problem with the way our TV services are sold?
The way we consume television has changed dramatically over the last few years in the UK. Aside from regular terrestrial analogue channels, for many years there was only one alternative: Sky’s satellite subscription service. Now though, with both Virgin Media and BT serious competitors to an already decent basic Freeview service, the consumer has more choice than ever.
While this sounds like a good thing, unfortunately it can have its downsides, as Virgin Media XL subscribers found out this month with a £3 per month price hike. The reason for the increase? The addition of BT’s new sports channel, BT Sport Europe.
Quite sensibly Virgin Media, which no longer owns any channels or sporting rights itself, is trying to brand itself as “the only provider to offer all the major sporting action in one place.” While not technically true (Sky subscribers can get all the BT Sport channels with an extra subscription), the point remains that Virgin Media needed to add BT Sport Europe to its line-up in order to make this claim and have any advantage over the opposition.
But with BT paying £897m for exclusive Champions League and Europa League action in a three-year deal, and a subsequent £960m for Premier League rights alongside Sky Sports from 2016–19, it was always going to start charging more for its sports channels.
That cost is naturally passed onto other providers, including Virgin Media, who previously offered BT Sport ‘free’ as part of its XL TV package, something that left the company in somewhat of a quandary. The result is a huge gamble – asking customers who don’t necessarily want a sports package to pay £3 per month extra to fund one.
Some Virgin Media customers are naturally unhappy, and rightly so. But actually the problem is deeper than that – in a world where everything is now on-demand, from individual song streaming to choosing and watching movies at the touch of a button, is TV ‘package’ subscription really the right model for high price events?
Nialli on the VMHD blog sums it up well:
I think the days of channel bundling are numbered, especially as the noise of cord cutting gets louder, so is this is the latest evolution of the principle of bundling (i.e. us paying through the nose for channels we don’t watch) or is the start of the desperate death throes of an outdmoded pricing model?
The problem for the media companies is that they have so much content that nobody wants, but still generates them income, and the only way to pass on this content is through packages. The viewing figures for some of the more obscure channels you will find on Sky or Virgin Media are incredibly low, especially when you compare them to how many hits a relatively decent YouTube vlogger gets per month.
Its inevitable that a rebellion will start soon; the contrast between the enormous sums paid for football rights and the money the average television punter is willing to pay is getting ever more noticeable. Sky has of course already tried and failed at the pay-per-view model for football games, so the solution is a tricky one. But whichever broadcaster comes up with it first, may well take a giant leap in the market.