After Virgin reached the one million mobile contract mark this year it was clear that its high-end strategy was more than just talk. The company’s quad-play strategy is also taking shape, with 11% of its customer base now taking all four Virgin Media services.
Virgin says it has a cable customer base of around five million and a contract mobile customer base of one million – of which a ‘good proportion’ are cable customers. Taking into account its prepay mobile customers, the company now has over one million mobiles in its cable homes.
The more cynical have said that the huge emphasis on quad-play has seen mobile ‘tagged onto the end’, of the company’s TV, fixed telephone and internet offerings.
But Virgin Media director of mobile Jonathan Kini is adamant that the mobile side is more important than ever. He says: ‘I think for me, the results speak for themselves. I can understand from an organisational point of view it feels like a tag on, but we are very happy – 11% of our customer base is now quad-play. In terms of numbers, look at the growth – we are a very able business.’
Kini has driven this growth, and is credited with Virgin Mobile’s high-end turnaround after taking on his current role one year ago.
The company’s strategy to gain new users has seen it marketing its mobile offering to existing users of broadband in a bid to gain triple-play or quad-play users at a low cost. However, Kini emphasises that Virgin is not just targeting Virgin customers.
‘From my perspective there are two aspects,’ he says. ‘There are a considerable number of people I can talk to that aren’t on Virgin. This is a focus for me. A significant number of people come to us that aren’t on Virgin Media and we can talk to them about other products.’
Kini cites RIM’s BlackBerry, which Virgin added to its portfolio this year, as an example of a product that entices non-Virgin Mobile users. He adds: ‘We can talk to them about fixed to mobile – if we multiply the people we can pick up from the core.’
Kini talks of a ‘balance’ in the way consumers want to buy mobiles. The handset is a driver, he says, adding that Virgin Media has ‘good relationships with manufacturers’. ‘We offer the right balance [of products],’ he says.
Going forward, Virgin Media’s strategy is set to focus on content, with its ‘third screen’ approach to share content through mobile, laptops and TV.
Kini says the company is ‘continuing [its] differentiation process’ with a third screen approach, with more to come in the next quarter. It has already inked content deals with Disney and Turner Broadcasting.
Kini is all too aware of the direction the data market is going, as operators are forced to drop their ‘unlimited’ offers.
‘Clearly there has been an explosion in data and more people want smartphones than expected,’ says Kini, adding that Virgin Mobile is in a good position as an MVNO.
‘We have no plans to change data packages but looking at convergence with smartphones, we want to make sure Virgin offers fair tariffs,’ says Kini. He adds: ‘I think you see it [strain on the network] with broadband, with a small percentage having a high usage.’
Consumers are changing the way they use their phones, says Kini. ‘If we look across [analyst firm] GfK data, the growth area is in high-end smartphones. We have been very successful in the low-end.’ He adds that Virgin is now ‘very happy’ as when it has launched products such as the HTC Desire, there has been ‘high demand’.
And Virgin has added a host of handsets over recent months, including several high-end Android devices. This is a far cry from the cheap and cheerful brand it once was. ‘And we can expand that,’ says Kini. ‘We have built up that credibility. It’s a balance of the halo of Virgin Media and the quality.’
Kini says he wants to talk to ‘all the manufacturers’, but adds: ‘Not everyone wants a top-end handset – we have multiple segments. We very much pride ourselves on listening to customer feedback. As part of building our proposition we spend a lot of time with real customers and get real feedback.’
Virgin is also growing its retail estate. It has almost tripled its retail footprint since June 2009 from 37 to 96 sites, including 64 retail stores. ‘We are aiming for 75 this year,’ says Kini. ‘As we get to a reasonable size footprint we will be able to show how these services come together. We are pretty confident our stores offer something different.’
Best Buy deal
In April, Virgin Media announced a partnership with Best Buy to showcase ‘the connected digital home’ in its UK stores. Kini points to the advantages in the partnership, namely that while Virgin has the services, Best Buy has the hardware.
He says: ‘Best Buy is complementary. We work very closely with Best Buy – they have out of town stores and there is a lot of distance from our stores. We have massive exposure in TV, games and broadband.
‘Our brand is at the front and centre at Best Buy,’ says Kini, adding that the pair are showcasing 3D TV alongside quad-play, as well as a gaming section branded with Virgin. ‘If you are a serious gamer you need serious broadband,’ he says.
‘We want to reiterate that quad-play is working for us and there are a million customers on contract,’ says Kini.
Virgin may have come a long way but as Kini indicates, it is only the beginning.