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Viewing report
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U.S. Consumer Broadband Content Services Markets
Frost & Sullivan, March 2004
Content Needs to Become the Key Influence Behind Consumer Migration to Broadband
Most broadband access providers are convinced that declining high-speed Internet prices are the key reason behind increased adoption of broadband. Limited evidence supporting the ability of superior content to increase 'portal stickiness' further prevents greater focus on portal specific entertainment content. In order to facilitate investment from access providers, it is essential to position content applications as the prime driver behind the shift from dial-up to broadband. Growth in online gaming and emergence of low cost downloading services such as iTunes are encouraging consumer adoption of subscription-based entertainment services. Improvements in compression and caching technologies are also helping broadband providers offer superior quality downloading and streaming services without shifting customers to a higher tier service.
This research focuses on a variety of online content applications offered by high-speed Internet service providers to their broadband consumers. It identifies and analyzes end-user trends in online content adoption/usage and highlights broadband access providers’ strategies in developing the content most desired by the consumers. The key focus of this study is on online entertainment content such as music, video, and gaming.
Paid Online Content Market Expected to Grow in the Future
Highly volatile demand for paid online content, both in the music and gaming industry, limits the broadband access providers’ interest in developing and pushing a content-driven revenue model. On a positive note, increasing consumer awareness of ramifications of illegal music and video downloading services is encouraging adoption of subscription-based online services. Increasing use of anti-piracy techniques and aggressive marketing of paid services by content providers are also driving demand for subscription-based content. For instance, content providers such as Movielink, iTunes, and Xbox offer promotional free downloads to new customers in order to increase service usage.
'Third-party content developers are likely to continue to dominate the online paid content services market and access providers need to partner with independent content providers to enhance their broadband portals and boost average revenue per subscriber,' explains the analyst.
Access and Content Providers Develop Partnerships out of Necessity
Developing content in-house or partnering with content specialists is an important decision that access providers need to make. 'With the growth in availability and adoption of third-party content providers such as iTunes, PressPlay, Musicmatch, Inc., and others, a partnership strategy provides low-cost and faster market entry for broadband providers,' says the analyst.
Transferring the user to the content partner’s site has several advantages for access providers including multiple system operators (MSOs). For instance, displaying links to content developers simplifies Web-navigation, and is likely to help reduce churn among broadband subscribers. This approach also allows MSOs to focus on existing core revenue generating services such as basic and digital cable, video on demand, and high-speed data services, while the content partners become responsible for maintaining and updating portal content.
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