Between 2005 and 2009 multiplay subscriptions in Latin America grew steadily at a CAGR of 44%. Multiplay grew at a much faster rate than the total number of people subscribing to pay-TV, fixed broadband and fixed line, which grew at a CAGR of 9.2%. That means that over the last five years people were not only subscribing to pay-TV, broadband and fixed-line service, but those who had already subscribed to them started converting to multiplay bundles.
The benefits for those subscribing to a multiplay bundle range from discounted services to a more convenient relationship with the service provider through consolidated billing and converged services. For operators, there are many benefits to bundling clients in multiplay offerings. Bundled services increase brand loyalty and shifting costs, reducing churn. For instance, Virgin Media, the only quad-play provider in the UK, has a churn rate of 0.7% in its quad-play package, 0.9% in its triple-play package and has an overall churn rate of 1.3%. Multiplay offerings also allow operators to cross-sell additional products and services that not only increase their revenues at a low marginal cost, but allow them to spread their high fixed costs across a larger customer base.
Interestingly, the number of multiplay subscribers was not affected by the crisis. In fact, many subscribed to multiplay services during the economic downturn to access discounted services. According to the UK telecom regulator OFCOM, in 2008 almost 50% of new multiplay subscribers did so to save money during the recession.
Competition and especially the recession have put pressure on multiplay prices. The the average monthly price of double- and triple-play subscriptions in Latin America has declined steadily over the last years, with a deeper dip in 2008. On average, between 2005 and 2009 the price of a multiplay pack declined at an annual rate of 5.9%.
However, Pyramid Research thinks the decline in multiplay prices is necessary to increase revenues. Operators will continue aggressively increasing the number of subscribers and upselling new products and services to existing customers. As a result, we expect multiplay revenues to grow at a CAGR of 12% between 2010 and 2014.
This report examines the three levers operators will need to pull to ensure they keep their multiplay revenues growing: Increasing the number of customers signing up for bundled services, selling new VAS to existing clients to increase fees in higher-income segments, and shifting existing multiplay clients from double play to triple play and to quad play. Finally, the report includes three case studies where we present the different strategies followed by operators to retain and increase customers.
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