Beyond Triple Play: Value added services for broadband operators

Table of Contents

CHAPTER - 1

• EXECUTIVE SUMMARY
  • Figure 1.1: Operator value-added service stages
  • Figure 1.2: Operator service strategy segmentation
• Services scorecard
  • Figure 1.3: Value-added services scorecard top-line results
• Recommendations and value-added services in the future

CHAPTER - 2

• VALUE-ADDED SERVICES LANDSCAPE
• Core service problems
• Fixed-voice: Access lines and subscribers in decline
  • Figure 2.1: Europe, fixed-voice subscriptions in selected markets, 1Q04-1Q09
  • Figure 2.2: Global, top 25 service providers by VoIP subscriptions, 2008
• Broadband: Saturation and price competition
  • Figure 2.3: Global, broadband subscriptions and net additions, 1Q04-1Q09
  • Figure 2.4: Europe, broadband subscriptions and net additions, 1Q04-1Q09
  • Figure 2.5: UK, selected BT broadband packages, 2003-2009
• TV: Potential, but path to growth may be difficult
  • Figure 2.6: Global, multichannel TV subscriptions by technology, 4Q05-4Q08
• The path to offering value-added services
• Stage one: Single play
• Stage two: Dual play
• Stage three: Triple play
• Stage four: Multi play
  • Figure 2.7: Operator value-added service stages
• Segmenting the operator value-added services landscape
• 1) Communications services
• 2) Enabling services
• 3) TV enhancements
• 4) Content services
• 5) Web 2.0 and community services
  • Figure 2.8: Operator value-added services segmentation
• Operator service strategies
  • Figure 2.9: Global, selected operators, monthly top-tier online storage cost as a percentage of monthly top-tier broadband cost, Sep-09
• Narrow service range, lower cost
• Broad service range, lower cost
• Narrow service range, higher cost
• Broad service range, higher cost
  • Figure 2.10: Operator service strategy segmentation

CHAPTER - 3

• VALUE-ADDED SERVICES SCORE CARD AND ANALYSIS
• Methodology
• Scorecard criteria and weighting
• Scoring
• Top-line scorecard results
  • Figure 3.1: Value-added services scorecard top-line results
  • Figure 3.2: Informa value-added service scorecard
• Detailed scorecard results by service
• Music: subscriptions
  • Figure 3.3: Music: subscriptions, detailed scorecard breakdown
  • Figure 3.4: Music subscriptions, detailed scorecard results
• Online storage
  • Figure 3.5: Europe, potential monthly revenues from online storage, selected operators, 2Q08
  • Figure 3.6: Online storage, detailed scorecard breakdown
  • Figure 3.7: Online storage, detailed scorecard results
• Games: subscriptions
  • Figure 3.8: Example operator benefits from a games subscription service
  • Figure 3.9: Potential monthly revenue and ARPU uplift from games subscription service, May-09
  • Figure 3.10: Games: subscriptions, detailed scorecard breakdown
  • Figure 3.11: Games: subscriptions, detailed scorecard results
• Home monitoring
  • Figure 3.12: Home monitoring, detailed scorecard breakdown
  • Figure 3.13: Home monitoring, detailed scorecard results
• Web portals
  • Figure 3.14: Web portals, detailed scorecard breakdown
  • Figure 3.15: Web portals, detailed scorecard results
• Video: Web TV
  • Figure 3.16: Video: Web TV, detailed scorecard breakdown
  • Figure 3.17: Video: Web TV, detailed scorecard results
• Games: a-la-carte
  • Figure 3.18: Games: a-la-carte, detailed scorecard breakdown
  • Figure 3.19: Games: a-la-carte, detailed scorecard results
• Video: Paid online VoD
  • Figure 3.20 Factors determining consumer willingness to pay for operator video services
  • Figure 3.21: Video: Paid online VoD, detailed scorecard breakdown
  • Figure 3.22: Video: Paid online VoD, detailed scorecard results
• Social networks
  • Figure 3.23: Social networks, detailed scorecard breakdown
  • Figure 3.24: Social networks, detailed scorecard results
• A-la-carte music
  • Figure 3.25: Music: a-la-carte, detailed scorecard breakdown
  • Figure 3.26: Music: a-la-carte, detailed scorecard results

CHAPTER - 4

• WEB PORTALS
  • Figure 4.1: Global, top 10 Web sites by visitors, Aug-09
• Operator services
  • Figure 4.2: Typical operator portal offerings
  • Figure 4.3: Domestic monthly reach of selected operator portals, Dec-08
  • Figure 4.4: Europe, top five most popular Web sites by reach in selected countries, Dec-08
• Rival offerings
  • Figure 4.5: Selected Web portals and launch dates
• Operator strategies
• Outsourcing
• Premium content
• Community-focused
• Team up
  • Figure 4.6: AD Europe operator membership
• Operator advantages
• National champions and existing subscriber base
• Scale, and some room for targeting
• A safe bet
• A cheaper option
• Operator disadvantages
• A small advertising pie, even in advanced markets
  • Figure 4.7: Europe, online ad spend per Internet user in the big five markets, 2008
  • Figure 4.8: UK online display advertising spend, 1H08
• Winning over non-subscribers
• Mobile advantage overplayed
  • Figure 4.9: Global mobile advertising expenditure, 2008-2013
• Case studies
• FastWeb
  • Figure 4.10: Italy, operators' share of the broadband market, 1Q09
• Virgin Media
  • Figure 4.11: Virgin Media portal strategy

CHAPTER - 5

• SOCIAL NETWORKS AND ONLINE COMMUNITIES
  • Figure 5.1: EU, percentage of users that visit the following types of sites, Oct-08
• Operator services
  • Figure 5.2: Selected operator social networks and online community services, Sep-09
• Rival offerings
• Figure 5.3: Europe, Facebook' s rank in the social networking category, selected countries, Feb-09
• Operator strategies
• Niche interests
• Social network aggregators
• Work with existing players
• Operator advantages
• Operator disadvantages
• Late to the party
• National focus
• Mobile advantage
  • Figure 5.4: Europe, number of Facebook “fans” of selected operators, Jul-09
• Case studies
• Cyworld, South Korea
  • Figure 5.5: South Korea, SK Telecom' s community (Cyworld) revenues, 4Q06-2Q09
  • Figure 5.6: South Korea, Cyworld statistics, Aug-09
• BT, UK
  • Figure 5.7: UK, key findings from BT' s The Voice of Small Business report, 2009

CHAPTER - 6

• ONLINE MUSIC
  • Figure 6.1: Global, total value of digital music market, 2004-2008
  • Figure 6.2: Global, digital music revenue, by region, 2008
• Operator services
  • Figure 6.3: South Korea, leading music retailers, 2008
• Rival offerings
  • Figure 6.4: Selected broadband operator music services, Sep-09
• Operator strategies
• Competing head-on with iTunes
• Third-party partnerships
• Link with mobile offerings
• Subsidizing music to reduce churn
• Answering regulatory questions
• Operator advantages
• A scale game
• Consumers see operators as music providers
  • Figure 6.5: UK, key findings of Playlouder MSP survey
• First-mover advantage in subscriptions
• Operator disadvantages
• Displacing iTunes
• The problem of maintaining exclusivity
• Case studies
• O2, Czech Republic
  • Figure 6.6: Czech Republic, publishers' share of music market, Apr-09
• Potential benefits
  • Figure 6.7: Czech Republic, Internet advertising expenditure, 2008
• Initial reception and future success
  • Figure 6.8: Czech Republic, leading entertainment Web sites by daily unique users, Feb-09
• TDC Play
  • Figure 6.9: Western Europe, top 10 markets by broadband penetration, 1Q09
• Early success
• Virgin Media

CHAPTER - 7

• Online video
  • Figure 7.1: Selected markets, percentage of Internet users who view long- and short-form online content, 2008
  • Figure 7.2: Global, growth of online video traffic, 2008-2013
• Operator services
  • Figure 7.3: Selected broadband operator video services, Sep-09
• Rival offerings
  • Figure 7.4: US, online video metrics, Nov-08
  • Figure 7.5: Online TV and video competitive landscape
• Operator strategies
• Using Web TV to bolster TV and online content offerings
  • Figure 7.6: Cablecom live TV key facts
• Extending TV VoD online
• Paid-for vs. free content
  • Figure 7.7: TV and broadband market shares of selected cable operators, end-08
  • Figure 7.8: Sky Player monthly subscription charges for non-TV subscribers, May-09
• Web TV as a low-effort add-on
• Operators focusing on the TV
  • Figure 7.9: Factors determining consumer willingness to pay for operator video services
• Operator advantages
• Beating broadcasters to the punch
• Bolstering a weak TV offering
• Cable' s legal and content strength
• Operator disadvantages
• Previous failures
• Striking deals can be tricky
• Cheap set-up means limited offering
• Needs may already be filled
• Case studies
• ESPN 360, US
  • Figure 7.12: Change in market share of US operators carrying ESPN360, 2Q07-3Q08
• TV scale, service cost discourage operator participation
  • Figure 7.13: US, selected operator TV and broadband subscriptions, 3Q08
• Content providers balance online and TV offers
• Videoload Free, Germany
  • Figure 7.14: Germany, downloadable content sales and revenue, 2005-2008
  • Figure 7.15: Germany, online video services, Feb-09
• TV Everywhere/OnDemand Online, US

CHAPTER - 8

• ONLINE GAMES
  • Figure 8.1: Consumer spending on video games in the “big five” European countries, 2007
  • Figure 8.2: US games sales, 1997-2007
• Operator services
• Rival offerings
  • Figure 8.3: Selected broadband operator games services, Sep-09
  • Figure 8.4: Oberon Media, selected gaming partners, Apr-09
  • Figure 8.5: US, most popular free gaming sites by total unique monthly visitors, Dec-08
• Operator strategies
• Free and ad-funded
• Subscription vs. download-to-own
  • Figure 8.6: Cost of “Far Cry II” by platform and distribution method, Mar-09
• Working with third parties
• Premium vs. non-premium
  • Figure 8.7: Worldwide release timeline for Assassin' s Creed, 2007-2008
• Operator advantages
• Owning the entry point and multiple sales channels
• The billing relationship
• Audience make-up
• National champions
• The distributor rules the value chain
• Operator disadvantages
• Non content-driven operators will struggle to sell premium titles
• Crowded marketplace
• Case studies
• TeliaSonera
  • Figure 8.8: NextGenTel gaming market segmentation
  • Figure 8.9: Cost of selected games on BroadParkGames and Steam
• Neuf/SFR
  • Figure 8.10: Selected SFR value-added services
  • Figure 8.11: European IPTV service launch dates, 2003-2006

CHAPTER - 9

• HOME MONITORING AND SECURITY
  • Figure 9.1: Typical home monitoring set-up
  • Figure 9.2: Selected operator home monitoring services, Sep-09
• Operator services
• Rival offerings
• Operator strategies
  • Figure 9.3: Europe, most important reasons for having a home-monitoring service in the “big five”countries, 2006
• Operator advantages
• Undercutting the managed alarm players
• A market without large global players
• Resonance with the operator' s customer base
• Operator disadvantages
• Service closures indicate fundamental problems
• Unreliable operators
• Little advantage in owning the consumer' s DSL line
• Services are going mobile
• Case studies
• UPC, Hungary
  • Figure 9.4: UPC Hungary Pay TV and broadband subscriptions, 1Q05-4Q08
• Altibox, Norway
  • Figure 9.5: Europe, top 10 FTTx operators by subscription numbers, 4Q08
• Xanboo, Global
  • Figure 9.6: Potential uses for home monitoring
  • Figure 9.7: Xanboo customers by country

CHAPTER - 10

• ONLINE STORAGE
  • Figure 10.1: Online storage as delivery method for other value added services
• Operator services and opportunities
  • Figure 10.2: Selected broadband operator online storage services, Sep-09
• Rival offerings
• Operator strategies
• A limited social network
• The two-pronged approach
• Orange meets LaCie halfway
• Work with third parties
• Operator advantages
• Success in storage is a question of trust
• Unrealized storage assets
• Bundling, cross-selling and upselling
• Heavy promotion
• Operator disadvantages

CHAPTER - 11

• ONLINE PHOTO SERVICES
  • Figure 11.1: US, digital camera penetration of the adult population, 2006-2010
• Operator services and opportunities
  • Figure 11.2: Selected broadband operator photo services, Sep-09
• Rival offerings
  • Figure 11.3: Global, online-photo competitive landscape, Jul-09
• Operator strategies
• Free teaser offers
• Photo printing with third parties
• Open photo-sharing platforms
• Integration with partner sites or third parties
• Operator strengths
• A selling point for FTTx
  • Figure 11.4: Global, selected operators, minimum time taken to upload 100 photos, Jul-09
  • Figure 11.5: US, digital-camera sales by resolution, 2006-2008
• Privacy and peace of mind
• Owning the big screen
• Operator weaknesses
• A crowded marketplace
• The mobile advantage is fading; the TV advantage may follow
  • Figure 11.6: IPTV application models
  • Figure 11.7: Yahoo connected-TV ecosystem
• Limited value from third-party deals
• Case studies
• Scarlet, Netherlands
  • Figure 11.8: Netherlands, total online advertising market, 2005 - 2008
  • Figure 11.9: Netherlands, selected providers' online photo-sharing/storing services, May-09
• PCCW, Hong Kong
  • Figure 11.10: Hong Kong, PCCW Snaap, key facts, Jul-09

CHAPTER - 12

• SERVICES AND APPLICATIONS OVER FTTX
  • Figure 12.1: Fixed broadband network architectures
• Operator services to date
  • Figure 12.2: Selected FTTH service offerings and strategies, Feb-09
  • Figure 12.3: Global broadband subscriptions and key service launches, 2000-2005
• Future operator services
  • Figure 12.4: Future TV formats
• 3D TV
  • Figure 12.5: Selected 3D TV developments, May-08 to Feb-09
  • Figure 12.6: Benchmark for likely future bandwidth use of the average FTTH household
• Telehealth
• Cloud computing
• Services over open access networks

CHAPTER - 13

• RECOMMENDATIONS
• Value remains in the mundane
• Content services must be subscription-based
• Maximize the TV advantage, but don' t count on it lasting
• Play on your conservative reputation.....
• ..... but avoid “me-too” services and consider thinking niche
• Improve service sign-posting
• Bundle services more imaginatively
• Focus on services for next-generation broadband
• In the long run, act as service enablers and move up the value chain

APPENDIX 1

• Value-added services scorecard factor definitions

APPENDIX 2

• BROADBAND OPERATOR VALUE-ADDED SERVICES
  • Asia Pacific
  • Eastern Europe
  • Latin America
  • US/Canada
  • Western Europe