1% Churn Reduction Boosts Revenue 2.5% Over 5 Years

July 12, 2018

BOSTON--(BUSINESS WIRE)-- Reducing churn and increasing subscriber engagement is at the heart of most mobile operator content strategies, according to a new report from Strategy Analytics Wireless Media Strategies (WMS) service “Strong Churn Benefits and Improved Profits Drive Mobile Operator Content Strategies.” The objective of bundling access to premium subscription video or music services into tariffs is to upsell subscribers to higher priced tariffs with larger data allowances, drive user engagement and data traffic, all with the aim of reducing churn. Click here to access the complimentary executive summary.

Mobile operators have fared poorly in mobile content, whether through own branded content services or with their own app stores. Excluding pay TV services offered by multiplay operators Strategy Analytics estimates content contributes to single digit share of service provider revenue on average, though churn avoidance remains a key benefit. Phil Kendall, Director, Strategy Analytics, noted “Bundling popular premium subscription content in to wireless plans is a popular strategy for operators. Content bundling has potential to dramatically cut churn by almost half , while the impact of reducing the churn rate by 1% leads to 2.5% revenue growth over a 5 year period, assuming the operator acquires subscribers at the same rate.”

Intense competition, stagnating service revenue, and 5G on the horizon provide an opportunity for mobile operators to re-evaluate their position in content distribution.

Nitesh Patel, Director, Strategy Analytics, added, “The majority of operators remain focused on monetizing data. However, both AT&T and Verizon demonstrate leadership in content because of their position in content distribution and content creation which enables them to take a greater share of content revenue. Operators that want to be aggressive with 5G consumer propositions need to use content to demonstrate the value of 5G networks to users beyond an improvement in data speed. Operators must address issues such as how to convince subscribers to migrate from 4G to 5G, who they should partner, and impact of 5G on the content distribution value-chain.”