Last month, we released our ‘Navigating the Bundle Jungle: Content, connectivity and consumer trust’ study, which monitors and evaluates the attitudes of UK consumers towards bundled packages that incorporate both telecommunications and TV services. The study draws on consumer insights generated through an online survey of 2,500 UK consumers conducted in April 2016.
The publication of the report came at the end of a period of dramatic progress and development in the UK bundle market, a period marked by rapid and continuing evolution and – in recent years – by growing maturity. A number of factors have reshaped the bundle landscape, including the widespread introduction of fibre-optic broadband and 4G services, TV rights auctions, the rise of OTT content and ongoing market consolidation. The Bundle Jungle 2016 updates an earlier study – released in 2013 – that also explored end-user attitudes towards residential bundling.
In this article we take a closer look at the survey results from a media and entertainment perspective, as well as changing consumer viewing habits.
Embracing the familiar
Our report draws a complex picture, with consumers embracing new technology whilst also valuing the familiar. For example, far from seeing the demise of traditional TV, we find that more consumers watch the five main channels than in our 2013 survey – perhaps helped by innovations that make it easier to view anytime, anywhere. This mix of old and new highlights the need for providers to keep within the users’ comfort zone. Faced by multiple package and platform options, consumers may be more likely to stay with what they know, giving trusted brands a stronger base.
A thirst for content
Pay-TV providers can take comfort from the fact that their content is an increasingly important part of the bundling mix. The take-up of bundles that include TV options was not only above 2013 figures, but generated higher levels of satisfaction and loyalty. Users also see greater worth in their pay-TV – with 60 per cent of households agreeing they deliver value for money. Premium content is also getting more important, with more consumers telling us they are willing to pay for sport in 2016 than was the case three years ago.
As well as watching just as much free and pay-TV broadcast services, consumers are increasingly using VoD services. This thirst for content is driving heavy investment in original programming from both established and newer entrants. Timeshifted viewing – whether through catch-up TV or personal video recorders (PVRs) – is also on the rise and increasingly becoming the norm. While consumers are happy to watch TV content through VoD services, they’re not so keen to pay.
The freemium model is one that has been tried by broadcasters to attract paying viewers to catch-up TV services in return for ad-free content – that approach hasn’t proved viable in the past, but that could change as viewers get used to paying for ad-free subscription VoD services.
Viewing on the move
Despite significant take-up of smartphones and tablets, there’s still little appetite for watching long form content on the move, and despite plenty of digital multi-tasking in the home, there is – as yet – little simultaneous streaming of video content to multiple devices there.
This may change, however, with the UK government’s commitment to improving broadband infrastructure, and media companies’ renewed focus on enabling users to simultaneously view different bundle channels on a range of devices within the home.
Looking to the future
The continued (and potentially increasing) trust viewers place in the free-to-air broadcasters is a positive for traditional channels, but creates challenges for pay-TV operators. Might it mean consumers eventually value pay-TV less? On the other hand, set against this risk, it is notable that pay-TV delivers greater satisfaction for bundle consumers. This suggests that the pay-TV operators’ focus on customer experience – with enhanced content and connected TV propositions – may be key to competing with free-to-air broadcasters. In turn, free to- air operators may find that enhancements to the consumer proposition are crucial to their future success. Our survey results show that consumers are big on simplicity and trust, so media businesses should go with the grain of this priority.
Device usage and proliferation is also a key issue – while consumers appear to have little appetite for simultaneous streaming of video content to multiple devices in the home, that may well change as superfast broadband becomes more ubiquitous and viewing behaviours continue to evolve.
Consumers’ reluctance to hand over personal information should be a central concern for all players, with 70 per cent of customers saying they wouldn’t pay a premium for ad-free video streaming. Here, trusted brands will have the advantage, making them better placed to responsibly harvest and harness consumer data. In the future, this data may prove vital for all parties – helping pay-TV providers target new and existing customers, and free-to-air channels better meet the needs of advertisers.
Old or new, free or pay, at home or on the move: bundle providers face a new set of challenges in a market that is both mature and constantly changing.