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An analyst briefing presentation delivered by Stratecast/Frost & Sullivan global director of consumer communications Mike Jude.
Citation preview
Cutting the Cord Moving from Voice to Video
Mike Jude, Program ManagerConsumer Communication Services
January 26, 2011
Frost & Sullivan’s Growth Consulting can assist with your growth strategies
2
Today’s Presenter
Mike Jude, Ph.D., Program ManagerStratecast, a division of Frost & Sullivan
Functional Expertise:30 years of experience in telecommunications and IT which includes technology application, market research, consulting, and operations management. Particular expertise in: Decision AnalyticsMarket and Business AnalysisDeveloping Innovation and Encouraging Creativity
Industry Expertise:Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives in:•Local Exchange Telephone Service Providers•Broadband and Wireless Telecommunications Providers•Network Automation Technology•Service Automation
3
Poll Question
Which of the following cord cutting challenges concern you most?
• Revenue replacement
• Generation of new innovative service ideas
• Implementation of growth strategies
• A Growth Team focused on long term growth strategies
• A disciplined growth pipeline system with clear stages of generate, evaluate and implement
*Turn off your pop-up blocker, so you can respond to the next polling question
4
Focus Points
• Frost & Sullivan Consumer Preferences Survey• Cord Cutting Continues in the Voice Space• Cord Cutting extending into Video?• Where are they going?• OTT Options• Ramifications for Service Providers• Frost & Sullivan Perspective
5
Consumer Survey
• Survey conducted in November to gauge subscriber perceptions in the U.S. consumer communication services market
• Sample of 2012 residential consumers, yielding a 99% confidence level at a +/- 3% confidence interval: very accurate
• Results supplement and help explain the results from the quarterly Stratecast North American Telecommunications Trackers
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Cord Cutting in the Voice Domain Continues
• 5% continuing decline year over year.• Nearly 30% of those interviewed indicate they would drop
their landline if they had the option to do so.• Mostly people find a landline redundant• Yet, nearly 26% of those who drop their landline re-
subscribe.• A big reason they come back is for the security of the
landline connection.
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The Cord Cutting Dynamic
Source: Stratecast CCS 4-37; North American Voice Tracker 2010 Q3
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Drop phone for wireless?
0
5
10
15
20
25
30
35
City or town Suburb Rural
Location
% o
f S
amp
le I am considering it now
I might consider it in the future
I don't expect that I'd consider this
Unsure / undecided
Source: Stratecast
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Why did you drop?
20%
8%
3%5%60%
2% 2%
It was too expensive
It was less convenient
Landline features were too limited
I was moving
Since I use my cell phone all thetime, the landline was redundant
Poor customer service
Other
Source: Stratecast
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Did you re-subscribe?
26%
74%
Yes
No
Source: Stratecast
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Why did you re-subscribe?
4%17%
27%43%
9%
Cell phone service was too expensive
Cell phone coverage was limited
I needed the security of a land line
I subscribed to a bundled offering(video, internet, etc.) that included voiceservices
Other
Source: Stratecast
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Why do you keep your landline?
0
10
20
30
40
50
60
70
City or town Suburb Rural
Location
% o
f S
amp
le
I like the security of having a land line
Cell phone coverage in my home isspottyI make a lot of International calls and it'scheaper from my telephone.I like the innovative features I get, likecaller ID on my telephoneI don't have a cellphone
Other (Please specify):
For Internet access / DSL
Part of a bundle
For fax machine
For business purposes
Price / inexpensive
For other household member(s)
Do not have landline
Source: Stratecast
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Where do the landline subscribers go?
Source: Stratecast
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But Now Cord Cutting Seems to be Coming to Cable TV
• In 2010, we saw the first decline in cable TV subscriptions.• Decline of 3.2% year over year in third quarter.• Yet, at the same time, broadband subscriptions continue to
increase.• 2010 was the year of third party set top boxes
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Cable Subscriptions Decline
Source: Stratecast
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Why do subscription video consumers migrate?
0%10%20%30%40%50%60%70%80%90%
100%
Overa
ll Qua
lity
Ease o
f Use
Billing
Custom
er S
ervic
e
Value
Pricin
g
TV Service Attribute
% o
f S
amp
le U
sin
g C
able
TV
Ser
vice
Not-at-all Important
Moderately Not Important
Not Important
Neutral
Important
Moderately Important
Very Important
Most important consideration
Source: Stratecast
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Where are they going?
Source: Stratecast
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Third Party Set Top Boxes Proliferate
Roku BoxBoxee
Apple TV Google TVGraphics from: Apple, Google, Roku, Boxee
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OTT Projections
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Year
U.S
. O
TT
Rev
enu
e ($
bil
lio
ns)
Total OTT RevenueMinimum
$3.01 $3.01 $3.20 $3.50 $4.50 $5.68 $8.00
Total OTT RevenueNormal
$3.01 $4.01 $5.60 $7.25 $9.75 $12.84 $16.50
Total OTT RevenueMaximum
$3.01 $5.00 $8.00 $11.00 $15.00 $20.00 $25.00
2009 2010 2011 2012 2013 2014 2015
Source: Stratecast
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Implications for Service Providers
• As broadband continues to penetrate the residential market over the top services will proliferate.
• Cord cutting in both the voice and subscription video domains is inevitable.
• OTT set top boxes are a gateway to a complete quad play experience; one that will be increasingly attractive to consumers and competitive with network operators.
• As Frost & Sullivan telemetry indicates, the attraction for consumers to retain landline services is the service bundle and security.
• Excellent customer service is critical.
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Frost & Sullivan Perspectives
• Carriers who wish to stop the erosion of their landline voice subscribers need to emphasize the attributes that consumers value beginning with security.
• Subscription TV services should focus on new premium content since archival content is increasingly the domain of the OTT provider.
• To the extent that conventional subscription TV can provide a “TV anywhere” capability, and more importantly brand that experience, it will help staunch the hemorrhaging.
• Focusing on ease of use can also slow cord cutting: it is the single most important reason cited by cord cutters for doing so.
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Next Steps
Request a strategic approach document for a Growth Partnership Service or Growth Consulting Services to support you and your team to accelerate the growth of your company. ([email protected])1-877-GoFrost (1-877-463-7678)
Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth, September 11-14 2011, Fairmont San Jose, San Jose, CA(www.gil-global.com)
Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities(www.frost.com/news)
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Competitive Structure?
Emerging Trends?
Strategic Recommendations?
Other?
Please inform us by taking our survey.
What would you like to see from Frost & Sullivan?
Frost & Sullivan’s Growth Consulting can assist with your growth strategies
24
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For Additional Information
Jake WengroffGlobal Director, Social Media Strategy and ResearchInformation & Communication Technologies(210) [email protected]
Mike Jude, Ph.D.Program Manager: Consumer Communications Services Stratecast | Frost & Sullivan(303) 466-2377 [email protected]
Angie MontoyaGlobal Analyst Briefing CoordinatorMarketing(210) [email protected]
Craig HaysSales ManagerInformation & Communication Technologies(210) [email protected]