Consumers are re-valuating the value of the traditional telecoms multiplay bundles in the wake of OTT competition, with almost half of the consumers saying they are considering changing either their service provider or bundle or both in the next 12 months.
The traditional multiplay package as the ultimate churn management strategy is in danger of losing its effectiveness. More than ever, there’s added urgency for service providers to regularly review the relevance, value and pricing of the multiplay packages they offer to customers.
The main drivers behind consumers’ intention to change providers are (1) migrating to a faster broadband speed, and (2) securing a cheaper bundled deal. When we investigated further, consumers also saw low usage of some services within a bundle as a reason for removing them from a multiplay package.
Unsurprisingly, fixed voice is the service most in danger of being dropped from a multiplay service offering. In contrast, fixed broadband, mobile telephony and mobile broadband were considered least at risk of being removed from a bundle.
Our survey results confirm that the value consumers attach to fixed voice continues to diminish, whereas fixed broadband remains sticky, and will likely continue to anchor most multiplay packages in the next five years.
What service providers should do
In the face of dwindling interest in traditional multiplay bundles, service providers should:
- Roll out new multiplay packages anchored by mobile telephony and mobile broadband, as these services become increasingly central to consumers’ mobile and digital lifestyle. StarHub has taken a step in this direction with a mobile telephony and broadband bundle.
- Fight back against Netflix and others by offering their own OTT content services. HKT and Singtel are layering their Viu and HOOQ OTT video services on bundles to capture and retain subscribers, though monetizing mobile video remains challenging.
- Take a leaf from their US counterparts and offer new bundled combinations, such as “skinny bundles” of a smaller selection of pay-TV channels, without the “filler channels”, at more affordable prices. Innovation in bundling is crucial, especially given the ever-increasing cost of traditional premium content rights.
Written by Nicole McCormick , practice leader at Ovum, and TZ Wong, senior analyst at Ovum