Case Study: Integrated Broadband Analytics and Notification Solutions Drive Significant Revenue Growth

 

Executive Summary:

The current broadband industry is experiencing unprecedented HSD usage growth and this trend is expected to continue for the foreseeable future. This reality presents operators with new challenges, but it also provides a path to monetizing the growth.

The widespread adoption of Over-the-Top (OTT) content along with a significant increase in the number of internet connected devices provides a unique opportunity for broadband providers to both increase revenues and improve customer satisfaction.

In this case study, a Tier One operator implemented a two-pronged plan to track a subscriber’s HSD usage and to communicate directly with the high-consumption subscribers on each speed tier in an effort to upgrade them to a higher bandwidth plan. This implementation boosts the revenue per subscriber and improves the service level based on the subscriber’s individual data usage needs.

The Challenge:

A Tier 1 operator, one of the largest cable operators in the U.S., had approximately 80 percent of their subscriber base on lower bandwidth tiers in 2015. As part of a capital reinvestment project to bring greater speed and services to the smaller markets they serve, the operator was exploring ways to migrate their customers to higher bandwidth plans in order to enhance the overall user experience.

“We are committed to providing the best technology available regardless of demographics. As data demands grow at exponential rates, our expanding customer base has increasingly diverse needs, but every subscriber deserves a quality user experience. Educating our subscribers with information about their usage empowers them to select those services and options that best meet their needs.” Tier 1 Operator CTO

Strategy:

By deploying a cloud-based solution provided by OpenVault, an industry leading data and analytics expert, and a subscriber notification platform supplied by PerfTech, the leading in-browser communication provider, the operator’s subscribers’ data consumption was tracked and customers were notified of usage thresholds. For example, subscribers were alerted when they were approaching specific data thresholds, thereby creating an awareness of usage and a suggestion for a higher bandwidth plan.

In this way, upgrade candidates were easily uncovered, enabling the operator to communicate with and right-size their customers.

“Being able to proactively reach subscribers at precisely the relevant moment enables operators to present action options that are optimal for each subscriber. This non-disruptive outreach proves effective across a variety of messaging needs. In this case, with OpenVault providing our messaging platform with automated usage triggers, the in-browser usage alert drives engagement and self-initiated upgrades that benefit all parties,” stated Jane Christ, SVP of Sales, PerfTech.

 

 

Results:

Through proper data collection, deep analytics and a subscriber education and communication strategy executed by the OpenVault and PerfTech integrated solution, the operator has been able to enjoy significant incremental revenue. In fact, 80 percent of the operator’s subscriber base migrated to the higher bandwidth tiers within one year of deployment of the integrated solution. This resulted in an increase in overall revenue per subscriber of nearly 20 percent.

“OpenVault collects network data regarding subscriber HSD usage behavior and provides deep analytics enabling solutions to help manage and monetize this usage. Integrating our solution with the industry leading in-browser notification tools of PerfTech has been a perfect match resulting in significant ROI for our joint broadband operator customers.” Mark Trudeau, CEO of OpenVault.

“The collaboration between OpenVault and PerfTech provided our subscribers with both the information and communication of their data usage to enable the customer to right-size their data plans. In doing so, not only did we see higher revenue per subscriber, but the overall customer satisfaction was also significantly increased.” Tier 1 Operator CTO

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US LESSONS LEARNED: OTT, DATA USAGE GROWTH & MONETIZATION RESULTS

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INTRODUCTION

In the United States, demand for over-the-top (OTT) video is at an all-time high with no signs of slowing down. In a culture that values and expects the delivery of massive amounts of content at anytime, anywhere and on any device, the demand for OTT content will continue to expand for the foreseeable future. In fact, industry experts predict that OTT video will and ultimately become a mainstream method for viewing video content. The “TV Anywhere” dynamic is a current expectation regardless of age or geography.

For example, in a recent study conducted by MTM, an independent London-based research and strategy group, domestic (US) premium OTT revenues are expected to grow from $4bn in 2014 to between $8-12bn in 2018. Niche services, complementing more generalist pay-tv or OTT offerings, are also expected to proliferate with up to 15-20 new specialist OTT providers acquiring 100,000 or more paying subscribers by 2018, with even more attracting smaller number of subscribers.

 

Over the Top Meets 4K

As OTT video consumption ramps up, consumer behavior and technology will continue to expand and evolve accordingly. In order to keep pace with and more importantly, optimize the ever-expanding OTT universe, the industry must anticipate market changes, overcome the technical challenges and create flexible business models that monetize new opportunities that assure both a quality experience for the subscriber and profitability for the operator.

As expected, the emergence of OTT in Europe is following a similar path to the US experience and despite regulatory issues and technology challenges, the European OTT market is also expected to grow
exponentially and present great business opportunities over the course of the next few years in particular.

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However, in order for Europe to experience the same success as the US OTT market, it is critical to understand subscribers’ high-speed data usage behaviors. As evidenced in the US, a granular understanding will allow providers to make optimal business decisions about their future broadband offerings.

 

THE US EXPERIENCE

According to the MTM study, the US premium OTT market has seen strong growth over the past years, largely driven by Netflix, YouTube, Amazon and Hulu. In 2014, the market was worth $4bn, having grown at a CAGR of 36% between 2011 and 2014. By the close of 2014, 40.3% of US TV households were subscribing to at least one premium OTT service. However, SVOD revenues, around $4bn, comprised only a relatively small share of the wider TV and video market estimated at approximately $185bn in 2014.

ov-data-usage3aThe rapid growth of premium OTT services in the US market has been due to a number of factors, including wide availability of broadband infrastructure; consumer demand and willingness to pay for content; scale and wealth of the US market; the fact that the US is a leader in media, entertainment and technology; and Netflix’s domestic success, which stimulates overall interest and investment in the OTT market.

ov-data-usage-4Successful operators, programmers, service providers and broadcasters in the United States who recognize the revenue potential of these market changes and OTT growth have adjusted their business models accordingly. However, in order to monetize these new opportunities, several factors must first be addressed in order to ensure this transformative success. To begin, consumer’s new viewing habits and high-speed data demands present not only technical issues such as network congestion but also pricing/budget challenges and customer satisfaction concerns. Therefore, many Independent broadband providers have begun offering cost-effective solutions that respond to consumers’ evolving streaming behaviors, offer friendly data usage plans and flexible pricing models and yet do not require large capital investment into the network infrastructure.

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Case Study: Effects of Metered Billing on HSD Subscriber Growth

Today’s increasing trend of “big data growth” does not show any signs of slowing down. In fact, with live streaming on an accelerating rise, and the amount of data being produced to the way in which it’s structured and used, this growth is expanding at unprecedented rates. And although this trend may present some challenges, it also offers tremendous business opportunities. To this end, many broadband providers who recognize that monetizing the data traffic growth is necessary and inevitable, have moved to usage-based, or metered, billing strategies for their High Speed Data (HSD) products.

However, other providers still sit on the sidelines hesitant to make a change and fearful of the potential for negative consequences of metered billing, including slowing subscriber growth. Therefore, this Case Study looks at the effects of metered billing on HSD subscriber growth.

 

Case Study 1

 

Case Study 2

 

The 12-month chart above also indicates that subscriber growth resumes in the months following the launch of metered billing. The 2 charts below take a look at the 5 month growth trend prior to launch and the 5 month growth trend starting in the 3rd month post launch.

case study 3

case study 4