Market Insight

TalkTalk overtakes competitors in quarterly TV net additions

May 14, 2013

Fateha Begum Fateha Begum Associate Director, Connected Devices & Media Consumption

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UK internet service provider TalkTalk has gained 150,000 customers on its TV platform in Q1 2013, pushing its total TV subscriber base to 230,000. The rise in IPTV homes sees TalkTalk overtake other pay-TV platforms in the UK for the first time in terms of quarterly net additions. Rival BT added 40,000 homes, Sky 24,000 and Virgin Media 13,700 over the same quarter.

TalkTalk has also reduced the price of its broadband and telephony bundles - the latest major packaging adjustment in the fast-changing UK TV and broadband market. The lower tier Essentials pack with broadband and telephony is to be offered for £3.25 per month over a contract period of 12 months, previously available for £3.25 for a six month period and £6.50 thereafter. The price of a triple play package, which includes the higher tier broadband service and access to basic TV is now being offered for £10.00, down from £15.50 per month on an 18-month contract.

In Q4 2012, TalkTalk announced its latest triple play offering, officially launching its TV service via the YouView set-top box, having stopped marketing its prior offer, TalkTalk TV the previous year. TalkTalk TV on YouView was being offered to all new customers of TalkTalk's higher tier broadband service 'TalkTalk Plus' for no additional monthly charge, with a one-off activation fee. The price of double play (internet and telephony) and triple play was set at £15.50 per month, providing access to Freeview TV services in addition to TalkTalk's on-demand platform.

The price adjustment from TalkTalk arrived just prior to the latest shake up in the market caused by BT's strategy to push broadband using premium sports content. BT, which is to provide its three sports pay channels free to all broadband customers, claims its 'free' sport strategy is a move to defend its place in the broadband market, rather than to compete with rival Sky on television services. Though TalkTalk claim they are not in direct competition with BT in regards to pay-TV services, due to the low propensity to spend of their customers and low interest in sport content, they now offer a cheaper broadband service compared to BT.

According to TalkTalk, approximately 20 per cent of their TV base are paying for content, be that channel packages or transactional on-demand content. Of this 20 per cent only 6 per cent are taking sport services, which is why TalkTalk does not see itself as in direct competition with BT in terms of television services. TalkTalk aims to attract households with Freeview TV access only, offering them a low-cost proposition for broadband and television.

TalkTalk have also announced the launch of a new set-top box in 2014 for their low spend Essentials customers, allowing them access to YouView and TalkTalk TV services, though without PVR functionality.


In Q4 2012, TalkTalk saw its first positive net additions to both broadband and television in nearly three years, ending the year with 4.05m broadband customers and 80,000 TV customers. It was also the first quarter in which IPTV net additions far exceeded that of BT, with quarterly additions in Q1 2013 exceeding that of BT, Sky and Virgin Media.  

The incumbent's YouView offer made little impact on its TV net additions in 2012, though it managed to add 40,000 households in Q1 2013, compared to 20,000 in previous quarters. It should be noted, however, that BT's TV uplift largely reflected better broadband additions. One customer for each five new broadband customers opted for BT's TV services in Q1 2013, the same rate of uptake seen in Q4 2012.

The choice to extend the £3.25 basic promotion indicates that TalkTalk is keen to protect its primary business line - broadband. TalkTalk will continue to offer the YouView set-top box free to Plus customers and has removed all installation costs (unlike BT which still charges an upfront fee). BT is continuing to charge a £49 activation fee for the set-top box. BT Infinity customers wanting to access BT Sport via YouView will be required to pay an upfront cost of £199 for a set-top box, or a monthly subscription fee of £5.

TalkTalk now offers the cheapest triple play offer on the market, with £10 for broadband, telephony and TV services, with an additional £14.95 in line rental charges. In comparison, BT will cost £30.25 (inc. line rental) assuming the consumer opts for the cheapest sVoD pack at £5, although this level of spend also includes access to BT Sport content. However, the price of accessing other linear TV channels on via BT has seen a significant boost in price due to the requirement for BT Infinity and an SVoD pack for TV access. BT customers would be paying a total of £37.45 on a monthly basis for access to a set of linear channels, excluding any set-top box fees, compared to £29.95 on TalkTalk for access the 'Entertainment Extra' channel package.

The pricing war which has led to both TalkTalk and BT cutting prices will undoubtedly have a negative impact on per-subscriber margins, though it seems that both companies see the current positioning in the context of a long-term strategy to protect the underlying broadband subscriber bases. Sky, the leading pay TV platform in the UK with 9.7 million households, is yet to react to BT's offer, though drastic price cuts are unlikely given the company's ongoing strength in exclusive TV content.

Article amended on May 16th to add details of Talk Talk's Q1 2013 results.

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