Video-on-demand converts 'shifting away from traditional TV channels'

The 55% of Virgin Media's customers who use its VoD service watch more programming in this way than via some traditional channels, says chief executive

'Customers are saying they want VoD and they want it now'

Television viewers are watching more programmes through video on demand services than via some existing traditional channels, according to the boss of Virgin Media.

Neil Berkett, whose company offers VoD content including BBC programming via its iPlayer, recorded its highest ever average number of on-demand views per month in the third quarter of 2009 at 66m.

About 55% of Virgin Media's 3.71 million cable TV customers accessed its VoD services each month during the quarter. Berkett estimated, from the experience of more advanced US VoD players such as cable company Comcast, that this could rise to more than 70%.

"[VoD] brings to life TV viewing, consumers are saying they want it and they want it now," he said. "Our customers who use VoD – that 55% – use it more than watch Channel 4 or Channel Five."

This shift in viewing applies equally to other channels of a similar size and Berkett added that the 66m views was the equivalent of 25 customers accessing VoD content every second of every day between July and September.

Berkett said that Virgin Media, which also has 3.77 million broadband customers, was "broadly supportive" of Lord Mandelson's proposals to crack down on illegal filesharing with measures that could include suspending internet connections.

"We are broadly supportive, we are the most progressive internet service provider in terms of protecting intellectual property," he added. "However, I firmly believe you can't just do it [reduce illegal file sharing] with a stick. We now have guidelines in place so we can concentrate on the carrot, hence our deal with Universal Music [to launch a music download service]."

Berkett said that the company was "much more comfortable and confident about our brand and what we are doing in the market" following Mandelson's outline of the future anti-piracy strategy.

Commenting on Ofcom's ongoing investigation into BSkyB's dominance in the pay-TV market, Berkett said that the rhetoric was "all getting a bit emotional". Ofcom yesterday published on its website all of the submissions to its review and expects to publish its final proposals in the first quarter of next year.

He said it did not make sense to argue that forcing Sky to sell its premium sport and movie channels at lower prices to competitors, including Virgin Media, penalised the satellite company for the risk it has faced and investment it has put into the UK market.

"We have invested £13bn in a [cable] network, that is not risk averse," he added. "It is not about 'oh, bad Sky', they are a very successful company. But it is now in a position where it has too much control over premium sport and movies."

Berkett was bullish about the prospects for Virgin Media in the fourth quarter but said he did not believe that the economy was in recovery mode yet.

"We haven't got any specific guidance [for the fourth quarter] but our results will continue to improve, they will be quite solid," he added.

"I think it is difficult to try and gauge overall consumer demand and economic recovery from a business like ours because we are a subscription business and people are staying at home more and spending money in different ways. They aren't spending on the high street as much, or in restaurants. It is difficult to gauge yet whether there is a recovery or not."