Home Service Bundles: Spotlight on Over-the Top (OTT) Video

The home service provider industry is in the midst of widespread change. As consumers continue to adopt OTT video services and traditional pay-TV subscriptions decline, service providers are pivoting to focus on broadband and a variety of connectivity-dependent services. Consumers are increasingly replacing the traditional bundle of broadband with pay TV, with their own self-bundled combinations - mixing and matching broadband service with online pay-TV services (such as Sling TV and YouTube TV) and subscription OTT services (such as HBOMax, Netflix, and Disney+). As pay-TV subscription revenue declines, services are seeking to grow the broadband subscriber relationship (and ARPU) via new services, new bundles, and new partnerships.

OTT video services are a natural fit, allowing service providers to capitalize on consumer demand for streaming video, and leveraging the related connectivity they are already providing. Consumers are frequently overwhelmed by multiple subscriptions, bills, and account management duties. Service providers can deliver simplification to todays consumers by offering OTT service subscriptions under a unified billing and management experience to consumers.

The addition of OTT services to service providers’ subscription and bundled service offerings is a viable way to add value, increase long-term ARPU, reduce subscriber churn, and increase stickiness with consumers.

Parks Associates new research study, Home Services Bundles: OTT as a Value-Added Service, examine consumer uptake of home service bundles with OTT, which providers are offering these bundles, and how these bundles are driving benefit for consumers.

Key questions addressed:

• What are the recent trends in OTT service subscriptions?
• What is the primary subscription method for OTT services, and has there been a change in consumer preference?
• What are the purchase triggers for OTT services bundles provided by home service providers?
• How do subscribers discover new OTT service bundles offered by service providers?
• What are the most important considerations for consumers regarding their OTT subscriptions?

OTT bundling has become a key revenue source for pay-TV and other home service providers. ?Parks Associates research shows now two-thirds of OTT subscribers have a service bundled through a home service provider and households with children have the greatest percentage of bundled OTT services.

Nearly half of all broadband households (49%) subscribe to four or more OTT streaming services, an increase of 18 percentage points from Q3 2020. Among those with at least one OTT subscription, the average number of subscriptions is nearly 6 services.

Consumers are increasingly self-bundling video services with broadband subscriptions, and this is rapidly becoming the “new bundle” for many households. The opportunity to receive services they were interested in subscribing to anyway such as HBO Max or the Disney Bundle, for free or at a discount from their broadband provider, is highly appealing in both value and billing/account simplicity. The ability to subscribe to an online pay-TV service / vMVPD such as YouTube TV or Hulu+Live TV through their service provider free, at a discount, or for the simple appeal of billing simplicity, is similarly appealing.

For service providers, this dynamic can be capitalized on via offering bundled or discounted OTT subscriptions to the broadband subscriber base. There is considerable demand for OTT bundles from service providers for the added simplicity, value, and convenience that consumers feel they receive. Service providers would be well-advised to focus marketing messages on the value of bundle packages, and the convenience / simplicity offered.

This research is an excerpt from Parks Associates new consumer study, Home Services Bundles: OTT as a Value-Added Service, published recently and authored by Paul Erickson, Director of Research, Parks Associates. Parks Associates has been studying the broadband and home networking market for almost 40 years and is a trusted advisor for companies needing reliable data and objective business intelligence.

We welcome all feedback on our research. Please share any comments. For more information on our research, please visit?www.parksassociates.com?or contact me directly with questions.