Editor’s note: Kamalini Ganguly is a Senior Analyst with Ovum, a global research firm.
LONDON – The US is one of the most fragmented multiplay markets in the world, and the disruption of the traditional bundle is only going to get worse over the next five years.
Global research firm Ovum warns US telcos and cable companies to put more focus on OTT [over the top] TV and mobile services in their bundles, or risk losing market share to disrupters offering more-relevant next-gen multiplays.
The nature of the bundle is changing, with nontraditional bundles – such as fixed broadband and a smartphone, or OTT TV – becoming more commonplace. The US has led the rest of the world in unbundling and configuring the next-gen bundle, but fragmentation will increase, and only the most relevant bundles will survive.
In new research, Ovum forecasts that up to a quarter of all bundled subscriptions in the global market by 2021 will be next-gen bundles, not legacy ones.
In the US, bundles have been evolving rapidly due to cable competition and innovation around the bundle. This trend will continue with elements such as fixed voice and pay-TV de-emphasized in the bundle, and more mobile and OTT TV services included in multiplays.
In Ovum’s new survey Digital Consumer Insights 2017: Multiplay*, fixed voice and pay-TV were cited as the two most commonly dropped services in a bundle among US consumers. Consumers said they removed pay-TV from the bundle to reduce costs (51%) and because everything they wanted to watch was available online or via free TV (33%).
- US multiplay subscriptions to decline by 2021
Ovum forecasts that bundled subscriptions globally will rise from 643 million in 2017 to 753 million in 2021, with bundled subscription household penetration increasing to 36.5%. However, the growth in bundled subscriptions in the US will decline over the five-year period (see figure), due to the maturity of the bundled market and the rise of naked broadband. Consumers have an affinity for naked broadband so they can construct their own DIY bundle with OTT video and VoIP services from providers that are separate from their fixed broadband provider.
Competition in the bundles space in the US, in particular, is fierce. Cable companies have been losing pay-TV subscriptions for some time and as a result have also lost momentum in traditional bundle subscription growth. Telcos are following a similar path.
All telco and cable companies in the US need a sense of urgency in addressing all of these threats to the bundle.
More often than not, telcos are not aware of demographic trends and how to bundle in accordance with changing demographics within their customer base or the wider community, particularly in the US.
The bundle is emerging as both a friend and foe of US operators. Our consumer survey found that 30% of US consumers said they planned to change their bundle within 12 months, of which 20% planned to change both their service provider and bundle.
On the other hand, 39% of the US consumers who did not take a multiplay package said they were likely to do so in the next 2–3 years, with a further 20% reporting that they are “unsure” and could be convinced to adopt multiplay.
These survey findings drive home the point that operators should regularly review the relevance, value, and pricing of their multiplay packages.
Read more at https://ovum.informa.com/
Note: The survey sampled 1,000 consumers in 4Q16 in the US.