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Broadband World Forum 2011 - Brett Sapington - Parks Associates - Digital Home VAS
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Presented by:
The Path to Broadband Profitability
Digital Home
Value-added Services:
Brett L. SappingtonDirector of Research,TV and Broadband Services
www.parksassociates.com Slide 2
Trends in Service Provider Strategies
Customer Acquisition Customer Retention
Access Provider Content Resource
Dumb Pipe / Channel Lineup Consumer Experience
Linear Content On-Demand Content
TV-based Video Delivery Multiscreen Delivery
Core Services Monetizing VASAdding VAS
Initial Strategy Revised Strategy
Delivery by Single Technology (e.g. cable or satellite)
Hybrid Delivery (e.g. satellite + broadband)
www.parksassociates.com Slide 3
73%
70%
68%
67%
67%
62%
56%
50% 55% 60% 65% 70% 75%
Premium tech support service (n=207, ±7%)
Online storage/backup (n=224, ±7%)
Parental control features (n=323, ±6%)
Anti-virus software (n=769, ±4%)
Home security service from BB provider (n=99, ±10%)
All broadband households (n=207, ±2%)
No VAS (n=767, ±4%)
% of Broadband HouseholdsSource: Cloud-based Value-added Services©2011 Parks Associates
The Impact of Value-added Services on Subscriber SatisfactionPercentage of broadband households stating high satisfaction with their broadband provider
(6-7 on a 7-point scale where "7" meand Extremeely satisfied)
VAS and Subscriber Satisfaction
www.parksassociates.com Slide 4 4
Premium Technical Support Services
8%
6%
7%
7%
7%
6%
6%
6%
3%
3%
4%
5%
3% 3%
5% 6%
5% 5%
8%
6%
4%
5%
6% 6%6%
5%
8%
7%
5% 5
%
8%
8%
6%
5%
10%
8%
5%
7%
10%
9%
5% 5% 5
%
4%
2%
3%
6%
5%
0%
5%
10%
15% U.S. France UK Spain Italy Germany
% "
Hig
hly
Lik
ely
" t
o u
se
se
rvic
es
i.e
., r
ati
ng
6-7
on
a 7
-pt.
sc
ale
Likelihood of using Professional Technical Support Services (Among Broadband HHs)
www.parksassociates.com Slide 5 5
Home Automation / Control
Smart home features have existed for years. Are they moving mainstream?
Benefits:• Traditionally for high end homes• Enables advanced features for
security, energy, and health• Hardware costs have fallen• Consumers more open to
convergence / control features
Challenges:• Operators have tried before• Limited as a standalone service• Fragmented market among potential
vendors / partners
Options:• Lighting controls• Thermostat controls• Appliance / power controls• Vertical-specific controls• Other
www.parksassociates.com Slide 6
Home Security Services
Demand for Security Value-added Services“How interested are you in receiving any of the following services from your broadband
Internet service provider?”
0% 5% 10% 15% 20%
Germany
France
UK
Spain
US
Italy
% of Broadband HH
Home monitoring service with a self-installed camera and ability to see home video online
0% 5% 10% 15% 20%
Germany
France
Spain
UK
US
Italy
% of Broadband HH
Want Service(6-7 rating)
Have Service from BSP
Home security service with sensors andcontroller to receive alerts
Source: Cloud-based Value-added Services© 2011 Parks Associates
www.parksassociates.com Slide 7 7
Energy Services
40% 20% 0% 20% 40% 60%
Ability to remotely control lights, appliances, and thermostats through a computer or mobile phone
Thermostat displays current temperature/weather forecast
Recommendations on how to make my home more energy efficient
Ability to know which appliances are consuming the most electricity
Thermostat that automatically adjusts for comfort when people are at home but savings when people are not home
Lights that automatically turn off when nobody is in the room
% Indicating Appeal of Feature
Not Appealing (rating 1-2) Very Appealing (rating 6-7)
Appeal of Energy-related Value-added Services"How appealing are the following for your home?"
(Among US Broadband HHs, n = 1,500, ± 2.5%)
Au
tom
atio
nFe
atu
res
Info
rmat
ion
Feat
ure
s
Re
mo
te
Co
ntr
ol
Feat
ure
s
Source: 4Q 2010 Residential Energy Management Survey
© 2011 Parks Associates
www.parksassociates.com Slide 8 8
Health Services
Health and wellness services are a very early market with growth potential
Benefits:• Valued by consumers who need such
services• Provides services for aging
population
Challenges:• Fragmented market• Multiple vendors with solutions only
for specific health issues• Self-pay for services• Sales channel• B2B vs. B2C
Options:• Senior care• Routine care• Wellness / preventive care• Chronic condition monitoring• Sports / active care• Safety / baby monitoring
www.parksassociates.com Slide 9 9
Convergence Services
My Unified Services
Combined mobile and broadband features available to those with both services. Same ID and passwords for mobile and Internet features. Merged mail boxes. Access online photo album via mobile or PC. Use virtual wallet on PC and mobile. Increased e-mail storage.
Voicemail ViewerAllows consumers to view landline voice mail via smartphone or PC. Requires download of app to viewing device.
Smart Controls
Internet parental controls application to allow parents to customize access and activity permissions for online and television. Provided for free with broadband and television services, respectively. Version for mobile phone available for $5 per month.
Universal Caller IDDisplays fixed line caller ID on the TV or Internet connected computer. Allows calls to be pushed to voice mail. Requires triple play. No additional charge.
Benefits:• Encourages multiplay• Encourages higher service tiers
Challenges:• More complex support issues
Companion Device Services
• TV Listings
• Programming information
• Remote DVR programming
• Social Interaction
www.parksassociates.com Slide 10
Strategies for Value-added Service Pricing
VAS Offered For Free Fee-Based VAS
Services that drive bundling
Services that minimize support calls / truck
rolls
Services that minimize churn, particularly for
fiber services
Services that minimize cord-cutting / cord-
trimming
Services that drive usage of the service or
push consumers to higher tiers of service
Low cost, network-based features that
provide differentiation
Basic levels of service that promote adoption
of fee-based service tiers
Services that enhance advertising
Services that encourage new Internet users to
get online
Services other operators cannot easily
duplicate
Services with an ongoing cost or hardware
that must be subsidized
Services with an incremental cost for content
(music, gaming, video)
Mobile-specific services
Premium tiers of free value-added services
Technical support services that address “out
of scope” issues for the operator
Value-added services that are building a
business outside of core access services
www.parksassociates.com Slide 11
Growth of Value-added Services
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
8,000.0
9,000.0
2010 2011 2012 2013 2014 2015
An
nu
al R
eve
nu
es
($ M
)
Convergence Services
Health Services
Monitoring and Smart Home Services
Entertainment (video, music, gaming)
Premium Technincal Support
Source: Cloud-based Value-added Services© 2011 Parks Associates
Global Forecast: Annual Cloud-basedValue-added Service Revenues by Type of Service
www.parksassociates.com Slide 1212
Brett L. SappingtonDirector of Research
15950 N. Dallas Parkway, Ste 575Dallas, Texas 75248
Direct: 972-996-0215
brett.sappington@parksassociates.com
Contact Information
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