Market Insight

TalkTalk confirms free YouView TV package, offers Sky channels in addition

July 25, 2012

Alzbeta Fellenbaum Alzbeta Fellenbaum Manager – Research and Analysis, Service Providers & Platforms

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UK telco TalkTalk has confirmed the launch of its new "free" IPTV service based on the YouView platform. The service will be offered at no additional cost (although a £50 engineer installation fee will apply) to TalkTalk's top tier 'Plus' broadband and phone customers. Under the offer, customers will receive a free YouView set-top-box (current retail price £299), access to all YouView content from major UK broadcasts (over 70 Freeview TV channels and catch-up and video-on-demand services, such as iPlayer), and TalkTalk Player (TalkTalk's own video-on-demand solution). In addition, 'Plus' subscribers now receive a 12-month free subscription to Lovefilm Instant service.

TalkTalk has also announced it had secured a deal with Sky, and will thus offer customers a range of Sky's basic and premium channels and video-on-demand content via YouView, including Sky's new internet TV and video-on-demand service, Now TV. The cost of the bundled package without premium content is £14.50 in addition to line rental, Sky Sports premium package comes with a £30 a month extra charge, Sky Movies package costs £15 a month.

With TalkTalk's own IPTV service, which it inherited as part of the Tiscali UK acquisition, dwindling (the service has not been offered to new customers since 2011 and TalkTalk has been winding down its content deals in recent months as well), TalkTalk hopes to reignite its TV offer and boost the number of triple-play (broadband, phone and TV) customers. It is a market-wide trend for all major ISPs to use TV service offers to attract customers to sign up for their broadband and phone packages as part of triple-play bundles and TalkTalk is desperate to turn around its falling market share and negative net additions. With 138,000 new subscriptions in Q2 2012 (4,001,000 subscriptions in total) BSkyB is only a step away from replacing TalkTalk as number three ISP in the UK broadband market (TalkTalk's subscriber base declined in Q2 2012 by 19,000 to 4,047,000). TalkTalk expects the new TV content offer will help to reduce departures of existing customers as to take advantage of the new offer TalkTalk will require a contract renewal for a 24-month term. The long contract length should ultimately compensate for the £140 subscriber acquisition cost quoted by TalkTalk.

While TalkTalk seems to be stepping up its game, its problematic customer service (according to Ofcom's July telecoms complaints report, TalkTalk's complaint rate is double that of BT, Virgin and Sky), may well still be a turn-off for UK customers - particularly as customers do not have the option to install the set-top-box themselves and have to rely on TalkTalk to organize the service for them.

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