When it comes to digital content, subscription-based models are rapidly – whether partially or fully – replacing traditional ‘ownership’ models. This trend was seen with streaming media services gradually replacing physical media like CDs and DVDs. Now, the trend continues as cloud-based solutions like Microsoft Office 365 replace native desktop business applications.
OTT providers, which offer many subscription-based services, were originally seen by digital and communications service providers as enemies. Because OTTs consume large amounts of bandwidth, they can be perceived to be putting strain on operators’ networks and eating away at their revenues.
But in reality, the two business models are highly dependent on one another: OTTs need digital and communications service providers as a delivery channel for their services, and digital and communications service providers need OTTs because their services generate enormous data traffic, which operators must learn to monetise if they are to stay profitable.
Here are five innovative approaches that operators should take to monetise customers’ digital moments in the OTT era, in order to secure a strong competitive advantage and continued growth in Nexterday.
When competing in the age of OTT services, digital and communications service providers must prove to customers that they can offer simple, flexible plans fast that easily accommodate data usage from the range of new subscription-based services available.
One effective solution is to offer multi-user, shared data packages. With these, customers can connect multiple devices and users to the same data bucket. This simplifies payment options for customers, while giving digital and communications service providers a chance to increase customers’ total data consumption and their own revenue generation.
Verizon Wireless has been successful with this approach through its More Everything Plan, which allows as many as ten devices to share a single data package, as well as cloud storage and unlimited talk and text. The U.S. operator allows customers to choose a plan tailored to how much data they and/or their family uses, so they don’t pay for data they don’t end up using.
This plan has seen wide adoption – the More Everything Plan’s penetration of all postpaid accounts increased from 36 percent in 2Q13 to 61 percent in 4Q14. It has also driven greater customer adoption of 10 GB plans, according to Verizon.
Digital and communications service providers – including AT&T, Sprint, TeliaSonera, Bell and Telenor – have followed the U.S. wireless operator’s lead and implemented similar programs, but it has taken time, partially due to the complexity of implementation. They should keep in mind that in order to roll out a successful shared data plan to their customer base, they will need a policy and charging product with both the configurability to manage multiple devices per subscriber and the ability to apply different QoS policies per user and device.