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”


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


Presenters & Panellists

Nikolai SierstedConsultant

STL Partners

Darius SinghSenior Consultant

STL Partners

Philip LaidlerPartner & Consulting

Director

STL Partners

Michael DennisGlobal Business

Development Leader

Cisco


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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:


1. The consumer landscape is changing and is complex -operators need a strategy to stay relevant


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]


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


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


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%


2. The Pay TV market is attractive, however, it may be maturing - telcos should look beyond the traditional triple play


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



…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


3. Operators are exploring new products to find new ways to win in the home


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


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


• 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


4. There is growing demand and willingness to pay for consumer cybersecurity and telcos are well placed to meet this


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


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


cybersecurity is the holy grail

of the consumer broadband

market

Northern European operator


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


We asked consumers: What has been the main barrier to you adopting a cybersecurity service?



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



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


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


$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



6. Operators should seek to build a brand based on reliability and trust


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


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]

mailto:[email protected]



growing consumer revenues beyond core connectivity · 2020. 5. 21. · success in b2b/b2b2c •...

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