Growing consumer revenues beyond core connectivity · 2020. 5. 21. · success in B2B/B2B2C •...
Transcript of Growing consumer revenues beyond core connectivity · 2020. 5. 21. · success in B2B/B2B2C •...
© STL Partners | Proprietary and Confidential 1
Growing consumer revenues beyond core connectivity
20th May 2020
Telco strategies to win “in the home”
© STL Partners | Proprietary and Confidential 2
Agenda and Topics of discussion1. Introductions
2. The consumer landscape is changing and is complex - operators need a way to stay relevant
3. The Pay TV market is attractive, however, it may be maturing
4. Operators are exploring new products to find new ways to win in the home
5. There is growing demand and willingness to pay for consumer cybersecurity
6. Operators should seek to build a brand based on reliability and trust
7. Q&A
© STL Partners | Proprietary and Confidential 3
Presenters & Panellists
Nikolai SierstedConsultant
STL Partners
Darius SinghSenior Consultant
STL Partners
Philip LaidlerPartner & Consulting
Director
STL Partners
Michael DennisGlobal Business
Development Leader
Cisco
© STL Partners | Proprietary and Confidential 4
GoToWebinar
• You’re in listen only mode
• If you need us, please type a comment
• Feel free to type questions throughout
the session for Q&A at the end
• We’ll send you the slides and a
recording shortly after the session do
share with colleagues
• On Twitter? Tweet us @STLPartners
1
2
© STL Partners | Proprietary and Confidential 5
To generate these insights, STL Partners undertook a research programme with operators and consumers globally
Region Role
Western Europe VP, Portfolio Management
Western Europe EVP, Consumer customers
Eastern Mediterranean Head of Strategy & Innovation
Western Europe Strategy & Business Development Director
Northern Europe Senior Strategy Associate
Western Europe Director of Commercial, Strategy & Governance
Northern Europe VP of Strategy and Transformation
APAC Head of Customer Insights & Design Thinking
Region Number of respondents (total)
Asia Pacific 418
North America 303
Europe 410
Operator interview programme Consumer survey and conjoint analysis
• Date: April 2020• The survey received 1,131 respondents• The survey was put out across multiple
markets:
© STL Partners | Proprietary and Confidential 6
1. The consumer landscape is changing and is complex -operators need a strategy to stay relevant
© STL Partners | Proprietary and Confidential 7
The consumer landscape is changing and so is demand for telco services in the home…
Consumers have higher expectations
There is increasing demand for more specialized services…there is more of a demand on value-added, rather than core, services – East Mediterranean operator [Hubble]
Broadband and connectivity are more critical than ever
We come back to the very basic needs as human beings and back to the very basic level of Maslow’s pyramid… that we have food, we have shelter, and we stay connected -Northern European operator [Ptolemy]
Consumers are increasingly impatient
Consumers are not willing to wait, they want everything here, now, immediately. Whether it is web browsing or video conferencing or video streaming, consumers are increasingly impatient - Northern European operator [Copernicus]
© STL Partners | Proprietary and Confidential 8
51%
40%
31%
18%
33%31%
37%33% 32%
35%
46%49%
51%
55%53%
51%47%
51% 52%
48%
3%
12%
18%
27%
14%
18%16% 16% 16% 17%
0%
10%
20%
30%
40%
50%
60%
25-30 31-40 41-50 51+ AsiaPacific
Europe NorthAmerica
Low ARPU MediumARPU
HighARPU
Age (years) Region Existing spend
… This is driven, in part, by increasing confidence about technology (even in non-digital native consumer segments)
Source: STL online survey April 2020, N=1,131
Global average –Avid user (33%)
Global average –Moderate user (51%)
Global average –Light user (16%)
• Avid user - dark• Moderate user - mid• Light user - light
We asked consumers how they would describe their confidence in technology
© STL Partners | Proprietary and Confidential 9
Segmenting the consumer market is difficult, there are no clear-cut strategies
Several strategies were mentioned in our interview programme:
Price sensitivity Digital confidence Age
The bottom line:• Telcos can use some key demographics to inform their go-to-market strategy• Operators need to find products with broad market appeal
the consumer market is segmented by economic divides –Western European operator [Galileo]
there are differences in demand for more technologically-educated consumers –Eastern Mediterranean operator [Hubble]
the older market just want to feel secure –Northern European operator [Ptolemy]
50.0%44.8%
55.0%
49.3%46.4%
55.4%
44.2%
55.1%
47.7%
41.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
25-30 31-40 41-50 51+ AsiaPacific
Europe NorthAmerica
Avid user Moderateuser
Light user
Pe
rce
nta
ge
of
res
po
nd
en
ts Global average (49%)
Age (years) Region Self-proclaimed technical maturity
Percentage of respondents who purchase additional services (beyond connectivity) from their broadband provider
© STL Partners | Proprietary and Confidential 10
Poll: Where do you see the biggest opportunity for telcos “in the home” (beyond connectivity)?
1. Remote monitoring/healthcare solutions
(e.g. for the care of the elderly)
2. Smart home solutions (e.g. smart locks,
utilities)
3. Cybersecurity services (e.g.
malware/phishing protection)
4. Entertainment services (e.g. gaming,
music, eSports)
5. Pay TV services (e.g. movies, original
content)
Remote monitoring/healthcare solutions (e.g. elderly care)20%
Smart home solutions (e.g. smart locks, utilities)26%Cybersecurity services (e.g.
malware/phishing protection)19%
Entertainment services (e.g. gaming, music, eSports)23%
Pay TV services (e.g. movies, original content)12%
© STL Partners | Proprietary and Confidential 11
2. The Pay TV market is attractive, however, it may be maturing - telcos should look beyond the traditional triple play
© STL Partners | Proprietary and Confidential 12
5%
10%
10%
10%
18%
38%
45%
60%
0% 20% 40% 60% 80%
Concierge…
Gaming…
Cybersecuri…
Smart…
Music…
Telephony
Mobiles
Pay TV
Percentage of respondents
58%61% 60% 58% 58%
63%58%
65%
58%53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pe
rce
nta
ge
of
res
po
nd
en
ts
% of buyers who purchase Pay TV
Pay TV has broad appeal in the consumer market – this is why many operators have focussed efforts here…
Of respondents who purchase services from their broadband provider, the majority purchase Pay TV…
…This was true across our consumer segments
Source: STL online survey April 2020, N=1,131
© STL Partners | Proprietary and Confidential 13
…However, it is time for operators to look beyond traditional TV offerings
• Content has been a significant part of operator strategy over the past decade
• However, the Pay TV market is becoming saturated with competition
• A more holistic entertainment proposition might encompass content such as music, eSport and gaming
• Operators may adopt an aggregator model rather than investing in original content
• Explore new products
TV was a big differentiator for a long time. I would say, at this point, that the TV propositions of the competitors are becoming better than they were and ours actually has taken a bit of a hit –
Northern European operator
The Pay TV market is maturing
Operators should look to diversify
© STL Partners | Proprietary and Confidential 14
3. Operators are exploring new products to find new ways to win in the home
© STL Partners | Proprietary and Confidential 15
Telcos are exploring new services to broaden and augment their traditional broadband offering
• Pure broadband network differentiation is difficult due to the amount of shared fibre• The Pay TV market is maturing• Operators need new and broad ways to stay relevant in the home and avoid commoditisation
value of smart home is in integrating with the telco offering –Northern European operator [Copernicus]
Smart/secure home
[Pay TV] is not something to abandon, but we need to find new ways to drive
growth –Eastern Mediterranean Operator [Hubble]
Entertainment
[Cyber]security is now a basic human need –Northern European operator [Newton]
Cybersecurity
© STL Partners | Proprietary and Confidential 16
After the quad play, smart home, cybersecurity, and other entertainment propositions are the most purchased services
5%
10%
10%
10%
18%
38%
45%
60%
0% 20% 40% 60% 80%
Concierge services
Gaming services
Cybersecurity
Smart home bundles
Music streamingservices
Telephony
Mobiles
Pay TV
Percentage of respondents
• There is traction around a move towards B2C telehealth
• Operators like KPN have seen success• There is significant investment in the space
Of respondents who purchase services from their SP, cybersecurity, smart home, and content rank
• Telehealth outside of South East Asia will see most success in B2B/B2B2C
• Successful B2C plays likely linked to a smart home proposition in telehealth
• Smart home and cybersecurity propositions build on the idea of the telco as a trusted partner and a way to win in the home
The role of telehealth in the consumer market
Operators may struggle with a B2C proposition
© STL Partners | Proprietary and Confidential 17
4. There is growing demand and willingness to pay for consumer cybersecurity and telcos are well placed to meet this
© STL Partners | Proprietary and Confidential 18
Cybersecurity is a universal need…
26% 27% 24% 22% 25%29%
20%25%
37%31%
33% 34% 31%
33%
35%33%
63%
58% 57% 56% 56%
62%
55%58%
0%
10%
20%
30%
40%
50%
60%
70%
25-30 31-40 41-50 50+ North America Asia Pacific Europe Globalaverage
Pe
rce
nta
ge
of
res
po
nd
en
ts
Age (years) Region
• Cyber threats are a concern for me – light
• Cyber threats are a major concern – dark
We asked consumers: Are cybersecurity and data privacy a concern for you?
These consumers actively changed their behaviour while online due to the threat of cyber attacks
© STL Partners | Proprietary and Confidential 19
80%78%
74%70%
77% 75%
69%
76% 77%
62%
71%
78%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Consumers are willing to purchase cybersecurity from their broadband provider
Percentage of respondents willing to purchase cybersecurity from their broadband provider
Source: STL online survey April 2020, N=1,131
cybersecurity is the holy grail
of the consumer broadband
market
Northern European operator
© STL Partners | Proprietary and Confidential 20
Price is seen as the biggest barrier for consumers adopting a cybersecurity offering from their SP
5%
10%
11%
17%
17%
40%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
I do not fully understand the potential threats or services on offer
I do not think I currently need a cybersecurity service
The hassle of installation and keeping the service up-to-date
I already have a cybersecurity service that meets my needs
Figuring out which solution is most appropriate for my needs
The cost of the service
Percentage of respondents
We asked consumers: What has been the main barrier to you adopting a cybersecurity service?
Source: STL online survey April 2020, N=1,131
© STL Partners | Proprietary and Confidential 21
Price is a key concern when purchasing cybersecurity, but young and tech confident users prioritise product set
Surprisingly – when it comes to cybersecurity – younger age
groups are less price driven than older age groups
38%
19%
43%
Relative attribute importance score for cybersecurity offerings
Price per month
Product set
Installation methodology
Source: STL online survey April 2020, N=1,131
© STL Partners | Proprietary and Confidential 22
Consumers prefer an all-in-one cybersecurity package and are willing to pay for the additional security coverage
$3.20
$1.47
$4.36
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00
Bundle A
Bundle B
Bundle C
Bundle D
Marginal willingness to pay versus the basic cybersecurity bundle (bundle A) (USD/month)
Pro
du
ct
bu
nd
le
Source: STL online survey April 2020, N=1,131
Bundles Malware protectionPhishing + device hijacking
protectionParental controls +
content filtering
Bundle D x x x
Bundle C x x
Bundle B x x
Bundle A x
© STL Partners | Proprietary and Confidential 23
$2.75
$3.45 $3.49
$1.30$1.55 $1.59
$3.72
$4.69 $4.82
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
Low ARPU Medium ARPU High ARPU
Ma
rgin
al
will
ing
ne
ss
to
pa
y ve
rsu
s
the
ba
sic
cyb
ers
ec
uri
ty b
un
dle
(U
SD
)
Bundle B
Bundle C
Bundle D
There is willingness to pay, for greater security coverage, even in more price sensitive consumer segments
Marginal willingness to pay for cybersecurity services above basic malware protection
Source: STL online survey April 2020, N=1,131
© STL Partners | Proprietary and Confidential 24
6. Operators should seek to build a brand based on reliability and trust
© STL Partners | Proprietary and Confidential 25
Telcos should have reliability and simplicity at the heart of their brands to win in the market and justify premiums
The broadband market is relatively homogenous, what justifies a more premium pricing strategy is extras– this is where reliability comes in, customers want peace of mind - Western European operator [Galileo]
A simple portfolio is an important aspect of reliability, consumers do not want to feel overwhelmed with solutions:
customers want simplicity – sell them outcomes not products Western European operator [Kepler]
Reliability includes:
Security Cellular failoverSecurity Complete WiFi
© STL Partners | Proprietary and Confidential 26
Any Questions?If you have any questions regarding the content of this
webinar, or would like to reach out about our webinar
services, please contact:
STL Partners – [email protected]
Darius Singh – [email protected]
Nikolai Siersted – [email protected]