Fixed-only and mobile-only business models are rapidly disappearing as different forms of multi-play offerings appear (as in Figure 1 below):
- Integrated (fixed and mobile) telcos across Europe, Asia and North America are expanding into the pay-TV market to offer a quad-play service – also bidding aggressively for content.
- Mobile-only telcos have increasingly started to move into fixed broadband services (e.g. Vodafone, O2, Orange, M1, Taiwanese operators).
- Fixed-only operators are looking to add capability in the wireless space, typically through MVNO deals (e.g. Comcast and Time Warner Cable with Clear, FastWeb as an MVNO).
Figure 1: Multi-play offerings [Source: Analysys Mason]
In a recent project seeking to evaluate an operator’s multi-play synergies, Analysys Mason assessed the market and financial impact for operators launching multi-play services, which included:
- Bundling multiple services to increase customer retention and enhance the attractiveness for certain segments (e.g. one-stop shop for SMEs).
- Cross-selling fixed and mobile broadband to increase mobile broadband market share.
- Cross-selling fixed pay-TV services to increase mobile market share.
The market impact in all cases demonstrated that new multi-play offerings enabled operators to increase market share in both mobile and broadband at the expense of other operators. However, the multi-play operators did not always improve profits – in one case seeing an 11% decline in EBITDA despite an improved market position. Conversely, one existing operator was able to improve EBITDA despite the launch of a new multi-play offering in the market.
Figure 2: Multi-play analysis [Source: Analysys Mason project]
The results from our project identified the following key issues in launching and combating the launch of multi-play offerings:
- It is possible to increase market share with multi-play offerings through enhanced customer retention and new customer acquisition through bundling discounts.
- There is a significant profit risk if bundling discounts do not result in new customer acquisition.
- As a defensive strategy against a competitor’s multi-play offer, a very clear segment strategy proves to be profitable despite total market share loss.
Analysys Mason works extensively with operators in helping them to define the role for fixed strategies in their mobile business and the role for content, and to take advantage of multi-play.