Viewing the ‘third way’

As competition hots up in the pay TV market ahead of the digital switchover, BT is hoping its new marketing strategy will help its BT Vision service take on Sky and Virgin Media. By Joe Fernandez

BTVisionWhile Sky and Virgin may be the two biggest contenders in pay TV, there is another brand muscling in on the action. BT Vision is joining the fray with a marketing initiative implying that there is now a “third way” to watch TV.

The service, launched in December 2006, has failed to attract high subscription numbers. The BT Vision customer base has now reached about 398,000 consumers, according to the latest BT Group results. New converts to the service are subscribing to one or more of the on-demand programming packages that are available, but even with numbers rising take-up has been slower than BT anticipated.

The company hoped that its launch would put pressure on pay TV market leader BSkyB, but Sky says it added 171,000 subscribers in the last three months of 2008, compared with BT’s growth of about 60,000 subscribers for the same period.

BT chairman Sir Michael Rake says this is because the pay TV environment is not a level playing field, with Sky dominating retail sales, while BT relies mainly on its broadband customers. “One of the things I am determined to do is push for that level playing field in Britain and Europe. We have to provide assets to others on the same terms as we provide to ourselves. If you look at Sky, it has 95% of wholesale premium con-tent. If we have to wholesale to others, they should wholesale to us,” he adds.

BT is spending millions on driving consumer awareness of its TV offering. It broadcasts a series of TV ads under the banner “TV on your terms”. The idea behind the campaign is to show potential customers that the Sky and Virgin Media models are not the only ones available; consumers can choose the “third way” of BT Vision , blending a large number of channels with extra on-demand content.

The TV ads are complemented by mark-eting in national newspapers, consumer magazines and online, on sites such as MSN, Yahoo! and AOL. A BT spokesman says: “The messaging is underpinned by how easy it is to control how much or how little customers choose to pay for BT Vision.”

BT Vision comes with over 80 Freeview channels via existing rooftop aerials on an HD set-top box, together with access to a library of films, TV shows, music, sport, cartoons and kids entertainment. BT Total Broadband customers can choose to pay for what they want to watch or get a value deal for an additional 6.85 per month for the first three months then 13.70 per month afterwards. The company currently has 4.7 million broadband customers it can offer its package to and hopes its marketing strategy will help it boost subscriber numbers.

As revealed last week, BT is merging its BT Vision marketing team with the consumer marketing team because the TV package is now an “established” part of its broadband offer (MW, last week). The company says BT Vision will now be “marketed by an integrated team along with all other aspects of BT Total Broadband”.

Analysts say the new approach could help to improve the number of customers taking up BT Vision’s TV offering, especially with its new on-demand deals with all the terrestrial channels. Ovum analyst Annelise Berendt explains: “The problem BT faces is that more people are interested in Freeview and only paying for internet services. However, the continued expansion of programme offerings and interactive services could help BT give its competition a run for its money.”

BT Vision will face stiff competition from its two main rivals in 2009. BSkyB has announced plans to create 1,000 jobs to meet demand for its high-definition services and has permanently reduced the cost of a Sky Plus HD box to 49. Meanwhile, cable TV service Virgin Media is rolling out its ultra-fast broadband, in an effort to intensify the competition.

BT Vision, however, is optimistic it can reach 3 million subscribers by 2010. It claims it has “had extremely rapid growth compared to other platforms” and will “revolutionise” consumers’ relationships with their TVs. Its chief executive, Dan Marks, enthuses: “We are building a new version of television.”

Some of those buying into BT Vision’s “third way” would agree with this statement. But its marketing must highlight why the different choice is also the best one if the struggling service is to capture its desired subscription numbers.

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