Ovum VIP briefing TV Connect March 28 2017

Global appetites for
multiplay services
TV Connect, London
VIP briefing
28 March 2017
Jonathan Doran, Telco TV, Ovum
Tony Gunnarsson, TV & OTT, Ovum

Ovum | TMT intelligence | informa2 Copyright © Informa PLC
 This presentation examines attitudes of
multiplay subscribers and stand-alone
customers, based on Ovum’s recent
Multiplay Consumer Insights Survey: The
New Bundle.
 Why do consumers take out multiplay
services? Those that don’t: why not?
 What are key motivations in regards to
pricing?
 What do existing pay-TV subscribers
intend to do with their bundles over the
coming year?
 Will they extend existing bundles or will
they downsize to a la carte or OTT
alternatives?
 What about the younger demographics –
the 16-24 year olds – what are the driving
factors in their attitudes towards
bundling?
Multiplay Consumer Insights Survey: The New Bundle

3% 11%
17%
16%
18%
35%
How old are you?
16-18 18-24 25-34 35-44 45-54 55+
15%
29%
8%8%
9%
3%
28%
Which of the following best describes your
current family situation/living arrangement?
Married, no kids Married, with kids
Living with partner, kids Living partner, no kids
Living with parents Flat share with friends
 Survey methodology & demographics
 6 key markets (UK, Australia, Brazil, China, France,
US)
 Sample size 6,000
 Broad range of age demographics
 Even split between male/female
 Broad range of residences
 91% in long term residences - homeowner or long
term rental
 59% employed, 21% retired, 20% unemployed/
student/ homemaker
 A mix of early adopters, majority and laggards
 In short, a mixed representative sample!
Multiplay Consumer Insights Survey: The New Bundle

 There is a huge appetite for bundled services!
 The vast majority of respondents already take out bundles; a large proportion of those that
don’t, expect to buy bundled services in the next 2 years.
 There is a relatively untapped opportunity particularly for fixed & mobile bundles.
 However, there is a reduced level of interest in Pay-TV, which is hampering bundle take-up.
 For those that don’t buy bundles, the opportunity is limited but combination
of connectivity and TV could be key.
 However, some consumers simply prefer to mix services from different providers.
 For the younger demographic 16-24, the internet—both mobile or fixed—is
the most essential of all services.
 Pay-TV, Videogames, Facebook and Netflix are all of less importance.
 Internet and mobile must be centre of future bundles.
Key Messages

 Overall, two thirds of consumers said that they took out a bundle
 Obviously some variation across the 6 markets
 China highest proportion of multiplay buyers (76%) followed by Brazil (71%) and UK (68%)
 Australia and USA broadly in line at 57% vs 62%
 French most keen stand-alone buyers: 57% do not buy TV and telco products and services as
part of a bundle (however, some French might be buying bundles without knowing it!)
Majority of consumers keen to buy telco and TV as part of a bundle
63%
37%
Global
Yes No
57%
71% 76%
43%
68% 62%
43%
29% 24%
57%
32% 38%
0%
20%
40%
60%
80%
100%
Australia Brazil China France UK United
StatesYes No
Do you currently purchase two or more telecommunications and TV services as a single bundle?
(ie pay for on the same bill)

The most popular services at home are fixed broadband, mobile
telephony and Pay-TV
9%
30%
32%
40%
52%
62%
78%
0% 20% 40% 60% 80% 100%
Home security service
Mobile broadband
Subscription to a video on demand…
Fixed voice
Pay-TV
Mobile telephony (mobile handset)
Fixed broadband
Which of the following services do you personally subscribe to or currently have access to at home?

0% 20% 40% 60% 80%
Social networking (e.g.
Facebook)
Social messaging (e.g.
WhatsApp)
Mobile voice
Mobile text messaging (ie. SMS)
Pay TV
Home phone
Mobile Internet access
Home broadband
1 2 3
Fixed broadband is the top essential service
 Overall, mobile internet access is second most
essential, while pay-TV is fourth placed behind
home phone
 Just 5% ranked pay-TV as the principal service
 In the US, pay-TV is ranked second overall, but
significantly more ranked home phone first, and a
few more ranked mobile internet first
 In the UK, broadband, landline and TV scored
highly while in France, mobile internet access was
the second most important – far ahead of TV.
 Conversely, the UK respondents had home
phone, messaging and pay-TV as more
important than mobile Internet.
 UK bundle consumers continue to highly value
‘legacy’ services such as home phone
 However, this is perhaps because landline is
required to get broadband?
 For the French, bundling is all about connectivity
(as opposed to entertainment).
Please rank the THREE most essential services in
your daily life

16-24s: It’s all about getting online!
 For the age group 16-24, internet is the
most essential service in their daily life
 Mobile internet ranked first overall, but
home broadband was single most
important service (followed by mobile
internet)
 Messaging is second with social messaging
(WhatApp) and mobile texting scoring
broadly the same overall in importance
 But in terms of single most importance,
home phone, mobile phone and mobile
text take a shared second place in terms of
importance.
 Curiously, pay-TV & SVOD services, video
games, social networks and music
streaming are far back in terms of
importance!
0% 20% 40% 60%
Music streaming (e.g. Spotify,…
Video games
Subscription-based online…
Home phone
Mobile voice
Pay TV
Free online video platforms (e.g.…
Social networking (e.g. Facebook)
Mobile text messaging (ie. SMS)
Social messaging (e.g. WhatsApp)
Home broadband
Mobile Internet access
1 2 3
Please rank the THREE most essential services in
your daily life

Value is the primary driver for bundling
 It won’t come as a surprise that
the perceived value is the
dominant reason why customers
opt to purchase through a
multiplay package.
 None of the other fixed answers
ranked high.
 Interestingly, existing bundle
buyers do not necessarily rank
‘the ability to pay for multiple
services on one single bill’
particularly high
 7% overall, but as low as 5% in
UK, vs 7% in France and 9% in
USA.
Question only presented to those answering “Yes" to currently bundling
It was a good offer at the time of purchase
It is cheaper to buy the services in a bundle than buy them separately
I get the best customer service from that provider
That service provider has the best reputation / brand for those services
I like to receive a single bill for convenience.
Other
What is your main reason for purchasing a bundle of
services?

A large proportion are considering changing their service provider
or bundle, or both
 A large proportion of
respondents are considering
changing either service provider
or bundle or both in the next
year (a total of 39%)
 Less than half said they were
not changing their bundle or
service provider (43%)
 More Brits (46%) are
considering changing than
Americans (38%) or French
(29%)
Are you considering changing your service bundle
or service provider within the next 12 months?
Yes - considering changing both the service bundle and service
provider
Yes - considering changing my service bundle but keeping my
service provider
Yes - considering changing service provider but keeping a
similar bundle with my new service provider
No

A large proportion are considering changing their service provider
or bundle, or both
Question only presented to those answering “Yes" to currently bundling
 Top 3 reasons why consumers are considering changing either SP, bundle or both:
To get a better deal
To get faster broadband speed
To receive better customer service
6%
13%
17%
19%
31%
48%
51%
0% 10% 20% 30% 40% 50% 60%
To get a better online video service (such as Netflix)
To get a better pay-TV service
To get a better bundle of services that I can't obtain from my
current provider
To obtain a better range of extras (such as access to free public
Wi-Fi hotspots)
To receive better customer service
To get a faster broadband speed
To get a better / cheaper deal
Why are you considering changing your service provider?

Mobile voice least likely to be dropped in a bundle, while fixed
voice most likely to be dropped
 Mobile phone service was identified as the most likely service to be added to the
bundle for those who were considering making changes
 After mobile telephony & fixed BB, SVOD is the third most likely service to be added but
all service results are very close
0 200 400 600 800 1000 1200 1400
Fixed voice
Fixed broadband
Mobile telephony
Mobile broadband
Pay-TV
Online video (such as Netflix)
Smart home applications such as smart energy / security
How are you considering changing your bundle?
How are you considering changing your bundle? Add How are you considering changing your bundle? Remove
How are you considering changing your bundle? Keep as is How are you considering changing your bundle? Modify/Change

 Stand-alone customers also buy telco and entertainment services
And tastes are largely the same as those that bundle!
 Non-bundle buyers also considers fixed broadband the most essential service at home,
followed by home phone and mobile phone services
Based on our global sample, 37% do not currently buy bundles.
Why not?
63%
37%
Global
Yes No
57%
71% 76%
43%
68% 62%
43%
29% 24%
57%
32% 38%
0%
20%
40%
60%
80%
100%
Australia Brazil China France UK United
StatesYes No
Do you currently purchase two or more telecommunications and TV services as a single bundle?
(ie pay for on the same bill)

Lack of interest in pay-TV is the key reason why consumers don’t
buy bundles
14%
16%
20%
22%
33%
0% 5% 10% 15% 20% 25% 30% 35%
I am currently tied into a contract with my existing
provider
Want to combine the best service from different
operators
Can't be bothered changing
I don't believe it would be any cheaper to buy a bundle
I am not interested in receiving pay-TV and therefore
am not interested in a bundle
What are your reasons for currently not using a bundle?

Younger demographic (16-24) is sceptical about value in
bundling, and they are not interested in pay-TV…
12%
16%
24%
27%
28%
0% 5% 10% 15% 20% 25% 30%
I am currently tied into a contract with my existing
provider
Want to combine the best service from different
operators
Can't be bothered changing
I am not interested in receiving pay-TV and therefore
am not interested in a bundle
I don't believe it would be any cheaper to buy a
bundle
What are your reasons for currently not using a bundle?

Yet, nearly half of respondents said they are likely to bundle in near
future
 Almost half of respondents
currently without a bundle likely to
bundle in the next 2-3 years
 There is an opportunity for new
bundle customers
 Nearly a quarter are unsure so
some of these could potentially be
persuaded
 However almost a third are not
likely and cannot see them moving
to bundles
Question only presented to those answering "No" to currently bundling
How likely are you to buy 2 or more services as
a bundle in 2-3 years?
Highly likely Moderately likely Not likely Unsure/don't know

On the whole, 16-24s appear more likely to bundle in near future
 Compared to overall sample, the
younger demographic are more
likely to buy 2 or more services
as a bundle in 2-3 years
 ‘Highly likely’ group is somewhat
smaller than overall sample
 But moderately likely group is
almost 50% of total for 16-24s
 ‘Not likely’ and ‘unsure’ groups
are about the same
proportionately as the overall
sample (1/3 vs 1/4)
Question only presented to those answering "No" to currently bundling
How likely are you to buy 2 or more services as
a bundle in 2-3 years?
Highly likely Moderately likely Not likely Unsure/don't know

Consumers are attracted by discounts, but some simply do not
want bundles
 A significant sized group say that none
of the fixed answers could persuade
them to bundle (Global 24%, UK 37%,
US 31%)
 For customers not currently purchasing
bundles, by far the biggest reason that
would persuade them to do so is
receiving a discount (37%)
 As we’ve seen, value, price and
discounts tends to resonate with new
customers
 Cost is three times as important as the
second biggest reason (‘one-stop shop’)
The ‘single bill’ is perhaps more of a
benefit to service providers than to
customers.
Question only presented to those
answering "No" to currently bundling
a discount on the price of the individual services
convenience of paying for all services via a single bill
get additional services such as online storage, free Wi-Fi hotspot access
get a more advanced TV set top box
get larger mobile data allowance
get access to premium TV channels at no extra cost
get access to free online video services
Other
None of these
Please choose the most important factor that would persuade
you to take a bundled service offer from a single supplier?

 Non-bundle buyers have by and large the same telco needs and entertainment
tastes as those that bundle
 Some consumers simply do not want to buy bundles
 For those that do - fixed broadband remains the anchor product for most
bundles
 Consumers have shown they place the greatest value and importance on this service.
 Price and discounts is key to attract new subscribers
 Not necessarily sustainable…
 Innovative marketing of services to appeal to different demographics, for eg.
 Traditional bundle: focused on the fixed services
 Modern bundle: focused on mobile services
 Anti-bundle: a la carte / pick and mix availability of services
 Customers will go for the best and/or the cheapest services regardless of
where they come from…?
 Are customers getting better at mixing & matching their service choices?
Closing notes…

Further reading
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Ovum VIP briefing TV Connect March 28 2017

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