Liberty Global Presses Pause on 4K, WiFi First Hopes
Liberty Global has plenty to celebrate with its fourth-quarter and full-year 2015 financial report. Total revenue jumped 3% for the full year to $18.3 billion. Operating income increased 5% year-over-year to $2.3 billion. And broadband subscriber numbers offset video losses to keep total customer levels essentially flat over a 12-month period.
However, in an earnings call dominated by news of revenue growth and customer wins -- not to mention a new joint venture with Vodafone in the Netherlands -- Liberty executives were only lukewarm about prospects for 4K TV and a WiFi-first initiative that CTO Balan Nair touted as recently as four months ago. (See Vodafone, Liberty Global Form Dutch JV.)
Overall, the video news for Liberty Global Inc. (Nasdaq: LBTY) was encouraging, if not overwhelmingly positive. Video subscriber losses slowed in the second half of 2015, dropping only 0.1% in the fourth quarter, as compared to 1.5% year-over-year. Total video subs landed at 22.8 million (400,000 fewer than at the end of 2014), with losses more than offset by subscriber gains for telephony and broadband services. Telephony subs were up 3.9% on the year to nearly 14 million, while broadband subs jumped 4.1% to 16.8 million.
While noting difficulties in its video business, particularly in Western European markets, Liberty Global also highlighted several positives in 2015. The company emphasized the successful migration of 1.5 million customers from legacy video services to new video platforms; including a move of 800,000 customers to the flagship Liberty Horizon platform, and the addition of 350,000 customers to Liberty's TiVo-powered serviced offered through Virgin Media Inc. (Nasdaq: VMED) in the UK.
Yet both CEO Mike Fries and CTO Nair notably downplayed any expectations for meaningful traction with Ultra HD TV services in the near future. Speaking to the possibility of earning new revenue from UHD/4K TV offerings Fries said only: "It's too soon to say," and "It's something we're in a wait and see mode on."
Nair was equally unenthusiastic, suggesting that 4K won't even play a role in the Liberty Global TV bundle until 2017.
"For sure beginning next year, our devices... will be 4K-capable," said Bair, "so we'll be ready for it when the content catches up with it."
In comparison, rival BT Group plc (NYSE: BT; London: BTA) introduced a UHD sport channel last summer, and Sky (NYSE, London: SKY) in the UK is now heavily promoting its new UHD-ready Sky Q box, with promises to launch UHD service later this year. (See BT Preps UHD TV Channel With Ericsson and Sky Launches Next-Gen Sky Q Set-Tops.)
Nair also tamped down talk of WiFi-first mobile broadband services. Liberty Global is a big proponent of the quadruple play – adding mobile to the traditional video, voice and data triple-play package – but the cable company has already successfully tacked on mobile broadband in many markets through partnerships and acquisitions.
"I think on the WiFi-first question, we've done trials on it. We can get it working, but the more you do on the [Mobile Network Operator] MNO side, the less the need for a WiFi-first solution," said Nair.
That statement counters one by Nair last October at the SCTE Cable-Tec Expo when he said Liberty Global could have a WiFi-first product in the market before the end of 2015. (See Liberty Global to Try WiFi First.)
It also raises questions about how Liberty's cable brethren in the US might approach mobile broadband going forward: fight their own WiFi-first battle, join the spectrum race or try the partnership road for mobile broadband once again. (See Comcast May Be Lone MSO Wireless Bidder.)
— Mari Silbey, Senior Editor, Cable/Video, Light Reading