Multi-play services are set to continue to disrupt the market according to survey data from global analyst house CCS Insight.
The analyst calculates that over 12 million UK households currently commit to a bundle of three services from the same provider. A further 1.5 million will take a bundle of four services by the end of the year, with value, convenience and fewer bills given as the main reasons for signing up.
Yet CCS Insight expects the number of households purchasing bundles of four services to double in 2016, and to grow steadily in the near future, helped by consolidation of the telecoms market, such as BT's proposed acquisition of EE. It adds that by the end of 2019, almost 85% of UK households will have signed up to bundles of at least two telecom and media services from the same provider.
Drivers for growth will likely be promotional activities, the roll out of new services, the emergence of new pay-TV providers and a proliferation of no-contract options like NOW TV. As a result, argues CCS, telecom and media companies will be forced to make new alliances and acquisitions in an effort to compete with market leaders Sky and Virgin Media.
"Over 40% of UK households currently do not subscribe to pay-TV services: this is a huge opportunity," said Paolo Pescatore, director of multi-play and media at CCS Insight. "BT has shown the way with the success of BT Sport ... It's now using its sport channels to drive up subscriptions to BT TV among its existing customers. It's also targeting Sky TV customers who enjoy watching sports, while others like Virgin Media are positioning themselves as aggregators. We will see similar battles in other types of programming beyond sport, fuelling further competition. We believe programmes, especially exclusive material, will be a key weapon in providers' quest to secure customers. Those that offer a vast array of programmes will be better placed to succeed."
Going forward, CCS expects unique approaches like Lebara Play to provide further disruption and force established providers to continue innovating. It also sees the adoption of fibre broadband as helping online video-on-demand (VOD) services like Netflix and Amazon Prime Instant. "These on-demand services pose a serious threat to telecom providers' aspirations in video; the latter must react quickly and be able to move at Web speed to counter this challenge," Pescatore added.