NTL Making Headway In UK Portal Market
With its well publicised financial crisis consigned to history, NTL is in the best position to challenge the major players as the UK portal battle heats up. That is according to new analysis from Forrester Research.
AOL, with its premium ISP offering, expects to make most money in access, but MSN and Yahoo! rely on advertising for over 80% of their income. Forrester claims that the failure to differentiate will mean that MSN and Yahoo! continue to offer the same products, namely email-related services.
Analysts anticipate that while MSN will use its technology skills to attract advertising money, Yahoo! will respond using Inktomi technology to grab paid-for searches. AOL’s dial-up business is likely to keep it strong for another year but the spectre of mass-market broadband is already a cause for concern (see AOL Faces Up To Growing Broadband Threat).
The cable success story Cable operator NTL has undergone a difficult couple of years, but having emerged from Chapter 11 bankruptcy protection, seems ready to spread its wings (see NTL Emerges From Bankruptcy). Even during its darkest hour, broadband was an area of growth and the company added 144,000 customers in the first quarter of 2003 (see NTL Returns To Growth After Chapter 11).
“ntlworld has clawed its way from bankruptcy to being the ISP/portal with the highest number of broadband subscribers in the UK, doubling its traffic share during the year,” said Forrester analyst Hellen K. Omwando. “By charging consumers a low-entry broadband access price of £17.99, ntlworld has ensured that 60 percent of its 1.7 million net subscribers use broadband, and it has reduced annual churn from 25 percent to 13 percent.
According to NTL and its rival Telewest, over one million UK homes now have broadband cable internet access and where they have a choice, consumers tend to choose cable over an ADSL connection (see UK Cable Broadband Tops One Million Households).
Other portals The success of NTL contrasts with the fortunes at BT Openworld, which is yet to see a significant return on investment. The portal has a mere 2.4% share of traffic and Omwando claims that BT will have to target a price-insensitive niche market such as home businesses or upmarket customers who are willing to play it safe with the brand.
The situation is mirrored at Freeserve, which had the most ISP subscribers two years ago. Freeserve.com has barely broken through the 2% traffic-share barrier and its subscribers’ average 14-minute online session is less than half the 35 minutes spent by users of the US portals and ntlworld.
Forrester believes that Freeserve should concentrate on maintaining its dial-up users – 24% of the UK narrowband market – and compete by launching functional services like property finding. Other portals are also struggling to assert themselves in a competitive sector.
Tiscali and Lycos are still hanging on, but only just,” Omwando said. “Tiscali has the same broadband offer as ntlworld but crucially lacks the strong brand, and Lycos has maintained its 1.3 percent market share through Emotive Network services like Tripod and love@lycos. This year Forrester advises Tiscali to court SMEs, while Lycos should either retreat or seek a buyer.”