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Viewing report
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Bundled Communication Services in the United States 2008
Mintel, May 2008, Pages: 93
Contents
Scope and Themes
What you need to know
Definition
Data for this report
Abbreviations and terms
Abbreviations
Terms
Executive Summary
BCS share of consumer communications dollars rising rapidly
IM, online video and wireless broadband share market
Cell phone and subscription television carry 43% of communications sales
Consumers still selecting based on cost
Vast majority prefer a single bill
Quadruple plays poised for growth
More bandwidth, please
Transition from analog to digital to increase demand for HD
Comcast aiming to rule through content
Ads still focused on standalone service
Spend higher among minority groups online
Substantial interest in video chatting
Market Size and Forecast
Penetration for BCS rose from 25% to 32% in 2007
Figure 1: Sales of consumer communication service, at current prices, 2003-11
Figure 2: Sales of consumer communication service, at inflation adjusted prices*, 2003-11
Competitive Context: Internet Telephony
Instant messaging provides multi-content, multi-user communication
Figure 3: U.S. Top five online subcategories ranked by usage, May 2007
Figure 4: Fastest-growing U.S. IM providers, August 2006-June 2007
Instant messenger players
Figure 5: Most popular instant messaging services among teens and adults, November 2007
AIM/AOL
Yahoo! Messenger
Voice over Internet Protocol (VoIP) allows real-time voice chats
VoIP players
Figure 6: Revenues and subscribers for Skype and Vonage, 2006 and 2007
Vonage
Skype
Competitive Context: Online Video
Over half of all Americans now watch online video
Figure 7: U.S. Online video viewers, 2006-2012 (millions)
Online video is portable, interactive
Online video content is bite-sized, not full-length
Figure 8: Types of online video content U.S. users watch monthly or more frequently, February 2007
Netflix bypasses PCs, connects directly to televisions
18-24s lead the way and provide a glimpse of the future
Figure 9: Ownership of device for watching online video on the home television, by age, January 2008
Figure 10: Interest in complete “on-demand” programming, by age, January 2008
Figure 11: Interest in viewing online video on the home TV, January 2008
Competitive Context: Wireless Broadband
Wireless broadband gaining traction
Figure 12: Intent to purchase wireless broadband, by household income, March 2008
Figure 13: Intent to purchase wireless broadband, by age, March 2008
Verizon Wireless BroadbandAccess
T-Mobile Hotspot
Sprint Nextel Broadband Network
AT&T Broadband Connect
Segment Performance Overview
Verizon and AT&T have the advantage going forward
Figure 14: U.S. sales and forecast of consumer communication services, at current prices, by segment, 2003-11
Figure 15: Sales of communication services, by segment, 2005 and 2007
Segment Performance—Cell Phone
Quadruple plays and cell phone bundles
Figure 16: Factors that would influence U.S. Internet users to purchase mobile phone service from their fixed-line communications provider, April 2008
Add-ons
Cell phone subscriptions and sales
Shortage of family plans in bundles
Figure 17: Cell phone penetration, plan type, and spend, 2003-07
Figure 18: U.S. Cell phone subscriptions, 2002-07
Figure 19: Sales of cellular services, at current prices, 2003-11
Figure 20: Sales of cellular services, at inflation adjusted 2007 prices, 2003-11
Segment Performance—Internet Service
Overview
Exclusive content
Subscriptions and sales
Figure 21: Households with Internet subscriptions, 2003-07
Figure 22: Sales of home Internet services, at current prices, 2003-11
Figure 23: Sales of home Internet service, at inflation adjusted 2007 prices, 2003-11
Segment Performance—Pay TV
Introduction
DVR service headed toward becoming a standard feature
Premium content features
HD
Sales
Figure 24: Sales of subscription TV service, at current prices, 2003-11
Figure 25: Sales of subscription TV service, at inflation adjusted 2007 prices*, 2003-11
Subscriptions
Figure 26: Subscriptions and arpu to satellite and cable pay television services, 2002-07
Segment Performance—Landline
Sales and subscriptions in decline
Consumers like having a back-up communication system for emergency usage
Leaders’ subscriptions falling with segment as a whole
Figure 27: Sales of home landline service, at current prices, 2003-11
Figure 28: Sales of home landline service, at inflation adjusted 2007 prices*, 2003-11
Market Drivers
Introductory promotions
Figure 29: Introductory promotional rates for triple play bundles, May 2008
The convenience of a single bill
Figure 30: Annoyance with multiple bills, by age and household income, March 2008
The need for speed
Figure 31: Interest in high-speed Internet, by age, March 2008
Figure 32: Interest in high-speed Internet, by household income, March 2008
Limited awareness of speed differences
Figure 33: Awareness of differences in speed betweend DSL and cable Internet, by age, March 2008
On Demand media
HD content and the end of analog transmissions
Content partnerships may prevent commoditization
Portable Internet platforms can jeopardize sales
Growth of laptops may alter how consumers use media in the home
Figure 34: Laptop vs. desktop households, 2003-07
Security remains a central concern
Figure 35: Concern over e-mail spam and Internet security, by age, March 2008
Brand Differentiation
Satellite operators offer more HD channels— for now
AT&T stands out with ethnic programming
Comcast dominates content in niche offerings, volume
Cell phone providers have the edge, partnerships needed to counter
DISH the lowest-cost provider
Difficulty with brand differentiation continues
Figure 36: Perceived differences between subscription television providers, by age, March 2008
Leading Phone Companies
Company subscriptions and sales
Figure 37: Cell phone subscriptions, AT&T and Verizon, 2005 and 2007
Figure 38: Total U.S. sales (cellular and other) for AT&T and Verizon, 2005 and 2007
AT&T
Verizon
Qwest
Figure 39: Qwest U.S. revenue, 2004-07
Leading Companies—Pay TV
Company subscriptions and sales
Figure 40: U.S. Pay TV subscriptions for leading satellite and cable operators, 2005 and 2007
Figure 41: U.S. Pay TV revenue for leading satellite and cable operators, 2005 and 2007
Comcast Corporation
DirecTV
Time Warner Cable
Figure 42: TWC U.S. revenue for subscription TV, Internet, and landline services, 2005-07
DISH Network
Innovation and Innovators
Partnering with next-generation student dorms
Providing content the same day as the DVD release
Comcast-Facebook alliance targets young adult market
Advertising
Ad spend on bundled products rose 466% from 2005 to 2006
Figure 43: Ad spend on leading communication brands, 2005-06
Figure 44: Ad spend on BCS products, 2005-06
Battling for HD dominance
Figure 45: AT&T television ad, 2007
Figure 46: Comcast television ad, 2007
Cell phone carriers face off against cable
Figure 47: AT&T television ad, 2007
Figure 48: Verizon television ad, 2007
Consumers courted with freebies, rebates
Figure 49: television ad, 2007
Figure 50: Comcast “free Internet” television ad, 2007
Young consumers targeted with irreverent humor
Figure 51: Comcast “jabberwatchy” television ad, 2007
Figure 52: Comcast television ad, 2007
Spend on Communication Services
Average spend up 9% from February 2007 – March 2008
Figure 53: Average monthly spend on consumer communications (pay TV, home Internet, home and cell phone), by age, household income, and presence of children, March 2008
Quadruple plays report similar spend as triple plays
Figure 54: Mean monthly price for telecom services and bundles, by type of service, March 2008
Penetration for Bundled Services
Penetration for BCS rose from 25% to 32% in 2007
Subscriptions in online sample tend to trend upwards with age, income
Figure 55: Populations without cell phone, home Internet, landline, or subscription television services, by age, household income, and presence of children, March 2008
Penetration for bundled services in online sample
Figure 56: Use of bundled services, segmented by type of service, by age, household income, and presence of children, March 2008
Who Selects the Service Provider?
Under-25s less likely to select service
Figure 57: Main person in selecting service, by type of service, and age, March 2008
Reasons for Not Subscribing to a Bundled Plan
Figure 58: Reasons for not having a bundled service, March 2008
Figure 59: Reasons for not having a bundled service, by age, March 2008
Figure 60: Reasons for not having a bundled service, by household income, March 2008
Motivation for Switching Service
Cost is king
Young and old alike feel need for speed
Older users more resistant to change
Figure 61: Factors that may motivate a change in service, by age, March 2008
Interest in Video Conferencing
Those who try it like it
Figure 62: Interest in and experience of video conferencing, by gender, age, household income, and presence of children, March 2008
Minority Groups Online Keen on Tech
Figure 63: Average monthly spend on telecom, by race/ethncity, March 2008
Figure 64: Interest in and experience of video conferencing, by race/ethnicity, March 2008
Figure 65: Factors that may motivate a change in service, by race/ethnicity, March 2008
Figure 66: Interest in security and speed, among early adopter consumer group, March 2008
Appendix: More on VoIP
Open VoIP the likely eventual solution for home telephony
PC to PC calling
PC to Phone calling
Phone to Phone calling
Appendix: Trade Associations
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