1. The Cable Industry is Growing, Consolidating, and Diversifying
Worldwide, cable providers are busy upgrading their networks and expanding their plants. Consumer demand for high-speed Internet access is growing and the number of services that depend on broadband are increasing. This has encouraged governments everywhere to pour money into broadband initiatives, on top of private investments. As a result, new plants are all the rage, particularly in developing countries in Latin America, Asia, and even Africa. In more mature economies, there have been a number of mergers, acquisitions, and major equity investments, including Liberty Global’s $23 billion purchase of Virgin Media in the United Kingdom and its investment in Charter Communications in the United States. The message is clear — cable is scaling up.
2. Multi-screen: Go Multiple!
Consumers want to be able to access any content, anywhere, on any device, at any time. This is no longer a luxury — it’s become a “must have” here in North America, as well as in other regions. Cable operators are focused on offering new services and delivering content over multiple devices. And rightfully so, with the Interactive Advertising Bureau recently finding that in the United States alone, more than 60% of mobile video screening happens at home over WiFi, rather than on the go.
3. Worldwide, Telcos Still Have the Lion’s Share of Broadband Services
In the mature markets of North America and Europe, cable operators are focused on sustaining growth and expanding in the face of competition, while in the developing regions, the focus is still on increasing speed (mbps) and expanding coverage. Mobile may be the key to connectivity in the future, with an industry expert at this year’s Mobile World Congress recently stating that the next billion people to connect to the Internet will come from developing markets and through mobile routes.
4. Cord Cutting is Real but Providers are Looking on the Bright Side
Due to increased competition from telcos, satellite providers, and over-the-top (OTT) services, cable providers are experiencing a loss in basic video subscribers. In North America, for example, one industry expert speaking at the 2013 Caribbean Cable Telecommunications Association Conference reported that over 1.27 million households are no longer subscribed to cable video services. Comcast, TWC, and Mediacom have all reported a loss in video subscribers, as more and more people opt to view video online using services such as Netflix, Hulu, and Boxee.
That being said, a recent survey sent out to our service provider database found that not as many operators view cord cutting as a threat as the media would have you believe. We’ll be making those results public in the coming weeks, however, suffice to say that OTT is not the death knell for the industry, and in fact, many providers see OTT as an opportunity to develop new partnerships and/or revenue streams. Stay tuned for more details soon!
5. Bundling and Premium Add-ons are Still Strong in Mature Markets
Triple-play penetration continues to drive growth in Europe, as bundling slows down video defections while driving up average revenue per unit (ARPU). In the U.S., providers are starting to shift their focus to premium packages — such as faster Internet speeds and extra television channels based on subscriber habits — in order to stay on top. This is because they want to focus on ARPU rather than subscriber quantity.
6. Consumers Want Simplicity, Functionality, and Usability
Subscribers expect to be able to quickly connect their disparate devices and access content from anywhere, at anytime. They expect issues to be resolved at the first point of contact. From registration, to installation, provisioning, authentication, and finally, connection, things should just work — regardless of the type of device they are using or whether the subscriber is at home or roaming.
Thankfully, providers are paying attention. New initiatives include a focus on navigation and recommendation engines to enhance users’ search experience and allow them to connect with the right content at the right moment. This is one area where cable operators enjoy a leg up against OTT players — cable can aggregate content and pull relevant items together to present to the viewer while he or she is viewing related material. Many operators are also working to optimize back-office support and improve quality of service via the integration of OSS, service monitoring tools, and service portals to capture subscriber feedback.
7. The Search for the Killer App
While there has been a lot of talk about the next killer app, I believe that there is no one-size-fits-all solution and that a multitude of options will spur the industry’s next phase of growth. One operator shared its winning formula at 2013 Cable Congress in London that kind of nailed it: fast and reliable broadband, superior TV experience, complete with an intuitive user interface and simple navigation, all backed up by superior, knowledgeable service. Other operators would benefit by following this example and could turn to software and hardware vendors for help to achieve this goal.
8. Differentiated Services
We all know that differentiated services enhance customer retention. By leveraging insight into subscriber bandwidth usage or behavioral data, operators are launching a variety of new services based on customer needs:
- Prepaid: While popular in developing countries, prepaid is now gaining traction in mature markets such as North America
- In-home security services: Operators are moving beyond home entertainment to provide home security and monitoring services
- WiFi: The extension of WiFi into public areas is a great way for operators to create customer stickiness, loyalty, and spur consumption. Subscribers want a seamless experience as they move from room-to-room in the home and they increasingly expect the same experience outside the house too. Ideally, subscribers should be able to move from device-to-device and network-to-network with simple authentication and authorization
- Business services: Groupware and converged communication tools are increasingly being deployed to provide additional value for sustained customer loyalty.