Monday, March 28, 2016

Adding Revenue Through Value-Added Services

In the popularity contest between video services and other subscription services, this Vindicia study leaves no question as to who wears the crown – or where growth potential for our industry lies.  The study talked about how Over-the-Top and Video-on-Demand services are the single most important subscription service to users with multiple online subscriptions, but what is equally intriguing is the vast number of subscription services that offer new opportunities for operators and content providers.

Two key Vindicia findings -- that four in 10 subscribers rank video services highest and that almost 60% of subscribers engage with their favorite service 11 hours a month – speaking to the commanding presence that video has in the market.  At the same time, Vindicia found that an overwhelming majority would be willing to ante up for value-added packages, which could range from simple upgrades from basic to premium services to new opportunities such as digital health or Internet of Things applications.  Three quarters of respondents expressed a willingness to pay an additional $3.99 per month for services that would add value; when the cost was trimmed to an additional $1.99 per month, 84% said they would commit to upgrades.

Here’s how Vindicia’s CEO viewed the results: “First, as long as service providers deliver sustained and obvious value for money, customers will stick around. Second, demand for value-added benefits is so high that service providers can consider it a reliable avenue for significant business expansion. Our survey found that despite the notion that consumers don’t want to add significant financial obligations to their lives, they are very willing to pay for the services they value.”

Our take is that this is exactly the type of data that operators should consider as they explore opportunities in an Internet-of-Things world.  While video will continue to be the primary contributor to operators’ bottom lines, their ability to make their networks the hub of “smart” activity for consumers has the potential to take our industry into the uncharted waters of future growth.

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