When Virgin Mobile entered the market 10 years ago, it was touted as a low-cost, prepay brand, and seen as a separate company to Richard Branson’s Virgin Media.
Now the two have been integrated and the MVNO has moved to the high end, with 10% of its customers on a ‘quad play’ (TV, broadband, fixed and mobile) offering.
‘We entered the market with a simple proposition,’ Virgin Mobile MD Graeme Oxby tells Mobile. ‘Ten years ago, people wouldn’t have thought we’d be the first to do quad play. But signing up 10% of our customers to the proposition has given it some real credence – people will bundle.’
The MVNO, which runs on T-Mobile’s network, offers ‘better value’ to its customers by giving them free texts and minutes for taking a quad play bundle, rather than money off.
Virgin’s current strategy is to expand the number of mobiles per household. ‘We want two or three phones in one house,’ says Oxby. The company is targeting families and those living in shared accommodation. Oxby adds: ‘The opportunity is more households, and more people within those households.’ Free Virgin to Virgin calling is an added incentive to encourage its customers to do this.
Oxby says the number of customers taking its quad play bundles shows that ‘Virgin is shaping the market’, adding that triple play has now become ‘quite normal’.
Virgin has recently signed content deals with companies including Disney, which will enable the mobile phone to access services such as video on demand as a ‘third screen’, alongside TV and a computer screen.
Third screen rollout
The company has now reached the point where it will have a range of services related to rolling out third screen, Oxby says. This will start to happen as soon as next year.
People are not watching endless hours of TV on their phones, says Oxby. Instead, he sees the mobile as a filler, for example, when a customer is cooking and wants to carry on watching a programme, or for use on the train.
Oxby says: ‘I don’t think it [viewing content on a mobile] is as much about travel. I’m sure browsing on a bus happens, but people tend to access the internet, for example, in their kitchen. You may start watching a programme on the mobile and finish it at home. People are multitasking.’
And there is certainly an appetite for Virgin’s video on demand services such as iPlayer and catch up TV. The company saw 60 million downloads in
quarter three of 2009, and that figure is growing.
Oxby says: ‘Mobile is an on-demand service where people want to access internet and content. We are aware that it has a smaller screen and a small processor but it allows people to access what they want, when they want.’
Virgin Mobile was once a network at the low end of the device market, but is now moving towards high-end handsets. Oxby says: ‘We are certainly on a handset journey – we have moved steadily from the low end.’
However, he accepts that different households will have different needs from a device. ‘Kids want fully featured phones but not necessarily at the high end. Some families want top-end phones like Nokia’s Nseries or a BlackBerry, and others are not fussed about the handset. It depends how they want to interact with their mobile.’
Oxby says the percentage of customers with high-tier handsets is ‘growing’, but would not give numbers. Although touch-screens are ‘great’, Oxby says there is still potential for ‘button phones’ and lower bandwidth devices.
He adds: ‘There is a very strong segmentation on touch-screens. Device segmentation creates fit for purpose handsets.’
So will Virgin Mobile get the iPhone? Oxby says: ‘We will get it when we are ready and we will roll it out. The iPhone is not entirely consistent with our services.’
To make absolute sense, a Virgin Media video on-demand app would need to
be added, he says. This is not a deal that would necessarily be made with Apple, Oxby adds, ‘but we would need to get it right’.
Quad play, as Oxby puts it, is a ‘work in progress’. It provides a ‘low-cost acquisition route to market and has good benefits in terms of customer satisfaction’.
Oxby adds: ‘We have discovered the strategy and now we will keep executing
it. There will be more focus on penetrating the home, more high-end devices, and closeness between services.’