Digital content services: Jungle in the bundle

Content is no longer king for customers buying bundled services.

Content, as we’ve all been led to believe, is king. Turns out, though, it’s not, especially for consumers buying bundled phone, Internet and television services, and that has multi-play providers in a bit of a jam. Customers are demanding higher broadband speeds and new content services, but basing their buying decisions largely on getting a lower price. This holds true even in western Europe, where services such as content-heavy wireless and IPTV (television over the web) are more the norm, according to recent research by both KPMG and Ernst & Young.

That doesn’t mean content isn’t important, says Derek Purchase, national leader for the telecommunications industry at Ernst & Young in Canada. Offering premium content creates stickiness, meaning customers will be less likely to leave a supplier once they’re hooked. “The companies that are going to succeed will be those who can really differentiate their customers into specific segments and customize their services and content to the exact needs of the particular customer segment,” Purchase says.

One way to do that is by creating specific brands for individual demographics. Up to 21% of the 12,000 customers surveyed in eight European countries cited branding as a reason to take up a bundle, according to the E&Y report The Bundle Jungle. But service providers will still have to keep prices low while upgrading their infrastructure and increasing market segmentation. As industry consolidation continues globally, price differences will become negligible, forcing customers to base decisions on service quality and content.

And while cellphones would seem to be the service where it makes the most sense to focus new content plays, it’s the one that really doesn’t fit in well with most bundles. That’s because buying a cellphone service is a personal decision, while television, fixed phone line and Internet services are bought more on a household basis, says Purchase. That makes the bundle jungle just a little bit harder to swing through.