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In part one of this two part blog on Cord Cutters and Cord Nevers, I spent a week without using my PayTV service, instead using OTT services to sate my need for programming to see just how feasible an option it is.
You can read the whole article here, but in summary, I suggest that the arguments for cutting PayTV are getting stronger all the time and in the UK at least, one could could attempt it quite successfully. But there are still many things hindering cutting ties to PayTV - for example exclusives that you can only get on channels such as Sky Atlantic (Boardwalk Empire and Game of Thrones) and the convenience that comes from all your TV in one spot, as opposed to multiple apps/services.
In the beginning of the last blog, I led with the following statistic. 18-34 year old's are 77% more likely to become cord nevers and 67% more likely to become cord cutter households [Source]. Of course, it could be quite easy to dismiss stats that say people 'might' cut the cord, people might do a lot of things but the fact is that they are, in ever larger numbers.
ComScore data published in October 2014 revealed that 24% of 18- to 24-year-olds do not have a traditional pay TV service. Of these people, 13% previously had pay TV service but later cut the cord while 11% have never subscribed to a pay TV service at all.
In the UK, it's possible to see a possible result of this shift as a report states that, last year, the number of TV households actually fell and by as much as 300,000 as people move to phones, tablets and laptops/computers.
And to see this cord cutting/shaving in action, Reddit (a huge social networking and news website where community members can all submit content on endless topics) there is a cordcutters sub community (subreddit), with 72 thousand unique subscribers, who all share advice, tips and help on how to cut the cord and get cheap/free streaming services legally. They have a dozen related subreddits many again with tens of thousands of subscribers.
As well as many people who cord cut because of costs, the views of this reddit user are also extremely common;
"For me, it was a combination of things... a lack of interest in a lot of what is on cable TV, combined with a desire for more flexibility in where and how I watch TV. More and more, I watch "TV" on devices other than my television. I watch on my iPad around the house while doing projects or chores, or I watch on my computer while browsing the web, etc."
The problem for this person, is that operators are not keeping up with the changes in how consumers are viewing television - operators need to start getting creative with how they offer TV.
Like a kid in a candy store
Choice, flexibility and price are the three key points, and they're all very much interlinked with each other.
First and foremost it is likely that going forward operators are increasingly going to need to have some form of OTT offering and a robust means of providing live and catchup TV to subscribers through DVRs, mobile devices and laptops - The SkyGo app is an example of this.
This is not only a means of dealing with cord cutters by addressing their concerns and providing a solution, but as a service differentiator or perhaps even to keep up date with other service providers.
AT&T seem to have hit the nail on the head in addressing those three points by providing a service directly to those who want to "cut the cord"
"A $39-per-month bundle [with] 45 Mbps Internet and subscriptions to Amazon Prime and HBO. It's an acknowledgement that subscribers are smart enough to figure out the rest on their own. There aren't any sports channels, cooking shows or 24-hour news stations, and a phone service is completely separate, but these deals are designed for the Game-of-Thrones generation"
It's about empowering the consumer and recognising that there are dramatic changes in the way people are engaging with TV content which is not going to change back. Without these sorts of packages and offers you're making a consumer who is on the fence, choose between having your service or not. And ultimately a consumer who chooses 'not' to take your service brings in no money!
A provider, like AT&T, with packages that provide the flexibility, choice and prices that customers want, are less likely to see people cutting the cord.
I believe the industry could make great efforts in eliminating the notion of cord cutters and cord nevers, but they'll have to accept the idea of a cord shaver who is perhaps more money conscious, who is viewing content different but ultimately still wants some, but not all, of the services.
So in good order and good end of year tradition, we felt it worthwhile to recap some of this year's blog articles and see if they correlate with what the key goings on are in the industry.
Customer Experience
We started off the year with a blog on Customer Experience, at the time it proved to be very popular and it remains one of our most read blog articles. This is probably because in this environment of reduced ARPUs, general financial instability, and diverging customer habits getting the upper hand on the competition has been driven, in no small way, by improving Customer Experience.
Maybe that includes getting rid of customer bills?... it might sound controversial, but one operator is already doing it. This is something that we covered in a blog post ingeniously titled "Customers don't really want bills".
Even with things starting to pan out for many operators, as the European economy strengthens, superior customer experience has definitely become something that consumers expect of operators and driving the efficiency agenda can play a part in that as well. Talking of efficiency...
Operational Efficiencies
Other ways that operators have sought to improve their bottom line and increase their profits is through operational efficiencies. The OSS side of things has had a lot of focus in recent months with all the talk - and hype? - surrounding 'NFV' (Network Functions Virtualisation).
But BSS efficiencies have been talked about in a variety of flavours and incantations. We covered such topics in "Do we understand the meaning of convergence?" and "Expectations that have sped ahead: efficiency is crucial".
These topics appear to have dropped off the radar a little bit in the wake of all the NFV talk. However, the OSS/BSS bottleneck that currently prevents some operators maximising efficiencies in NFV, could see BSS efficiencies and even new BSS implementations (make sure you know why they sometimes fail!) being put in place to enable the full benefits of Network Functions Virtualisation integration.
Hopefully this means the topic will get a whole new lease of life!
Viewing Habits
Consumer changes in viewing habits have also come to the fore this year. From the extremes of customers ditching pay-tv services altogether, which have been becoming more of an issue for CSPs, as companies like Netflix become more prevalent. We've started covering this in part one of the "cord cutters/cord nevers" series. To customers general viewing habits changing a topic we looked at in "What’s next? Interactive multi-tasking!"
In a strange twist, North Korea has show just how much viewing habits have changed and how much ready consumers are for change.
With major US cinema chains pulling Sony's new film 'The Interview', but high public demand to view it, Sony called on On-Demand providers YouTube, Google Play, Microsoft Video and more recently iTunes to host the video for a nationwide release which earned them $18m. As much as they had aimed to earn via a national cinema release, so is this the end of the cinema?
We'll be looking at this ever more important topic in the new year.
What can we expect from the coming year?
Well, all these topics have been high profile topics throughout 2014, but the industry is still far from implementing these features fully. So we should expect to see more of them over the coming year(s)!
But there are a great many other things that might well present themselves in 2015, such as an increased focus on BSS systems that are able to provide flexible, personalised offerings to customers. Or an increase in telecoms companies adopting more non-traditional services, which are predicted to grow from 8-10% of income, to a potential 15-20% of revenue. This could help sure up bottom lines that are constantly under threat.
What ever the new year brings, Happy New Year, and all the best in 2015!
Well, of course, customer's don't want bills - who really wants a bill? But this blog isn't about customers who would rather get free services, this is about whether customers want to receive bills or if they're just happy to pay each month.
Over on Billing Views as part of an ETIS community gathering in Budapest, one service provider said that their customers didn't really want bills.
Taken aback by the comment he was then asked to clarify the statement.
He responded with;
"Absolutely, of course consumers do not want bills anymore. It is too much trouble. What they want is to look at their bank statement. If the amount is about what they expected, they are happy. If it is different they want to pick up the phone."
This got me thinking... when was the last time that I actually, properly, looked at a bill? I receive both electronic bills and 'traditional' paper bills. But I don't ever read them. The paper bills go in a pile awaiting the inevitable, but often delayed, shredding and the electronic bills (an email telling me to check the bill portal on their website) usually gets opened and ignored.
Why don't I check my bills? because I check my bank account, I have an account for my bills. I know what I put in each month and I know how much my respeqctive payments cost me each month. Just as the operators said, if there's something wrong - the amount isn't right - i'll check it out and if necessary pick up the phone.. but 9 times out of 10 i'm not interested.
So how did they come to this realisation?
A fluke apparently. Customers (for the most part) were notified that their bills were ready to view via text message and email. Typically bill related calls to the company's call centres are quite high, one day the text messages didn't fire to let customers know that their bill was ready and the number of calls about bills dropped dramatically "the percentage of calls about billing was virtually zero" - someone from Customer Relations brought the drop in calls to someones attention and they found out that the texts didn't trigger.
"Customers only think about the bill when they are told about the bill. Very very few call us to say they haven't received a bill"
With how easy it is to manage and track your banking and billing via online and mobile banking nowadays it's easy to see how this is the case. So should companies stop sending bills? What about the 'retail space' that comes with bills? the chance for cross-sells and up-sells? Irrelevant apparently.
"A bill will always have a negative impact" It's a reminder that there's more money leaving your account. Bills are never nice, apart from that one I had from my energy supplier that said I'd saved up quite a bit of credit and they were dropping my monthly charge as a result - but how often does that happen?
As we move further and further into the digital, it's very rare now to find a customer who doesn't have an email account - typically an older customer - so who needs to spend time crafting the space on a bill to sell something to a customer who is disinclined to view the bill in the first place. Send them an email instead it has less negativity attached to it, and there's more space for the offers and incentives.
Are there problems with this?
Sure, some people don't check their bank accounts routinely or regularly, so there's a risk that a problem will build up over time resulting in a very negative experience for the customer, but I would hazard a guess that if they don't check their bank account regularly then they're not likely to check their bills either and the situation is likely to occur either way.
What about customers' whose bill vary month on month? (fixed line and mobile, i'm looking at you) well, there could be a variable limit before a bill is triggered. Maybe 5% or £5 off the baseline monthly charge amount will trigger a bill to inform them of a deviation from their normal monthly charge.
By and large however, I'm seeing benefits - Bill related calls to the call centre virtually zero? A reduction in calls means less money spent on call centres. A reduction in the number of physical bill and text message prompts sent out means less money spent (and it's greener) and informing a customer of when they're bill is abnormal instead of reminding them of their charges each month looks proactive and procustomer - which is never a bad thing.
An interesting proposal, with some merit by the looks of it. Will it become the norm? hopefully.
Written by Craig Maxwell-Brown Business Development Associate at CoralTree Systems
