2014 has seen a large shift in approach when it comes to OTT services, operators are moving from effectively ignoring the problem to proactively partnering with services like Spotify and offering OTT content bundles.
Vodafone in the UK has begun to incorporate a choice of one of Spotify Premium, Sky Sports or Netflix access free for 6 months, as part of their Vodafone 4G Red plans. This gives Vodafone a nice headline message which encourages customers to sign up to a higher tier and increases mobile data usage. All positive so far but when a service like Netflix can use up to 1GB per hour, typical 4G plans with inclusive data allowances of 3-4GB seem meagre. Only a small number of customers really appreciate the value of a Mb which makes the positioning of OTT content bundles like Mobile TV extremely difficult.
Implementing Mobile TV/streaming services using a time bound monthly limit instead of per Mb charging eliminates the fear factor for customers when signing up to a value added service like this. Bell Canada’s Mobile TV service launched in 2011 and has become a major success for the operator, driving up ARPU and customer satisfaction scores. They included a large amount of TV channels for $5 per month. For me what has made the proposition so successful is that they include 10 hours of viewing per month, rather than viewing using up a customer’s existing data plan. Each additional hour costs $3 per hour. This gives the customer absolute clarity as to the limits of the service, instead of trying to match minutes to megabytes! Bell Canada now has 1.23m active Mobile TV customers or 15% of their entire base which is hugely successful for a value added service such as this.
Orange France offers the Deezer Premium music service as part of its top tier Origami plans. Customers on lower tiers can access the service for €10 per month. This construct allows the operator to increase mobile ARPU as it pushes customers to sign up for larger monthly commitments. Customers have peace of mind as they can continue to use their Deezer Premium mobile service even if they have used up their monthly data allocation. Utilizing this construct has made Deezer users on the Orange France network 50% less likely to churn than non-Deezer sign ups.
Orange France is just one customer example of using PCC to optimize content propositions for customers. As we’ve seen in several innovative operators this has led not only to increases in ARPU, but also reduces customer churn. Hastily implemented propositions may lead to short term gain for the operator but they will drive down customer lifetime value in the long term.
Hunter S Thompson also wrote ‘Fear and Loathing in Las Vegas’. Fast-tracking content bundle propositions without crystal clear messaging means operators are gambling with customer goodwill. The house always wins in Las Vegas and in this particular game; it’s the operator who gets their OTT propositions right first time who will win the big one.
