2020 Telecom & Media Trends: How’d we do?
Each fall, we develop our annual industry trends based on industry observations, competitive marketing intelligence, and consumer data. This year, the truly unexpected happened in the form of a global pandemic, which accelerated many of the trends we had anticipated for 2020. As we start preparing our 2021 Telecom & Media Trends, let’s take a look at Comperemedia’s 2020 Telecom & Media Trends to see where we got it right, and how the COVID-19 crisis accelerated our predictions.
Trend 1: The Big Swap-Out
New streaming video entrants would exacerbate switching activity, driving a heightened focus on loyalty and brand advocacy among streaming providers. Providers would look to drive more engagement with existing content libraries, consider discounts for longer tenure, and look to bundles as churn-reduction strategies.
How’d we do? We were right.
Mintel research on digital video found that the percentage of consumers using five or more streaming services increased significantly from 8% in April 2019, to 19% in May 2020. As new streaming video services entered the marketplace, and as COVID-19 meant more time spent at home, many consumers were willing to spend more streaming services. Even as consumers expanded their subscriptions, Parks Associates found that streaming video churn increased six percentage points from Q1 2019 to Q1 2020, reaching 41% in the first quarter this year.
We anticipated that Disney+’s success with its multi-year prepaid offers would inspire more streaming video providers to add multi-month or multi-year discounts to lock in subscribers for longer tenure and discourage churn. Peacock TV used this approach ahead of its launch, offering a $20 discount on its Premium tiers when customers purchased a full year ahead of its July launch. In August, Disney-owned Hulu unveiled an annual plan for its most popular, ad-supported tier, enabling customers to purchase a full year at a discount for the first time.
Providers are finding many novel ways to encourage engagement with existing content. Netflix is actively emailing subscribers to encourage them to go back and re-engage their favorite content. Hulu is using quizzes to help customers find new content they will like. Pluto TV invites users to vote on which movies they’d like the service to play on Friday evenings.
Bundles are popping up everywhere in 2020. The Disney+/Hulu/ESPN+ bundle was picked up by Verizon in August and offered to its premium subscribers for free. Also in August, Apple TV+ announced it partnered on a bundle that includes CBS All Access and Showtime. Apple went all in on the bundle with its announcement of Apple One in September, which pairs Apple TV+, Apple Music, Apple Fitness and more. In some cases telecom providers are even creating streaming bundles, as Telus did by offering free Crave and Netflix to new subscribers.
Streaming bundles will continue to grow, as consumers look for discounted pricing and an easier way to manage content. Providers will be challenged to find the right pairings and price points to appeal to various audience segments. Additionally, there’s still a great deal of room for creativity in customer loyalty in the streaming space, and we expect providers to get more innovative as they are forced to get even more mileage from existing libraries, in light of production delays caused by the pandemic.
Trend 2: Streaming free-for-all
As telecom providers, consumers, and advertisers embrace free, ad-supported streaming video services, these services will multiply. 2020 will see more ad-supported players increasing their marketing efforts to drive awareness, and established video providers and telcos will help drive awareness and usage.
How’d we do? We were correct, with one exception.
Indeed, marketing finally took off for the larger FASTS after March 2020. At a time when consumers were at home watching more streaming video than ever, FASTS, which had done very little marketing before 2020, made sure to put their brands in front of captive audiences. According to Comperemedia Omni, the biggest spender was Tubi, but H1 2020 marketing spending was up Y/Y for IMDb.TV, Pluto TV and Vudu, as well.
Some of these marketing spend increases were the direct result of important acquisitions that occurred early in 2020, as major media companies, seeing the value of FASTS, bought them up. For example, Fox purchased Tubi TV, and Comcast purchased both Vudu and Xumo.
Telecom providers also embraced FASTS in a variety of ways in 2020. For example, T-Mobile announced in April that the Tubi TV app would be pre-installed on LG phones from T-Mobile and Metro by T-Mobile. Comcast has integrated a variety of free ad-supported services into Xfinity Flex, while Verizon actively promotes Pluto TV access to its Fios TV subscribers.
We predicted that 2020 would end with at least twice as many ad-supported streaming video services as it started with, and that’s where we were wrong. Although several major FASTS launched this year, including Peacock TV, Fox Soul, Redbox, and Watchyour.TV, we had expected to see many more. However, established FASTS are regularly expanding the amount of content they offer—so there’s a greater volume of video available for free, but not necessarily a lot more providers.
FASTS gained viewers during COVID-19 lockdowns, and will continue to build on this increased viewership in the months ahead. Video advertising platform Unruly found that 35% of consumers globally tried a new ad-supported streaming service since the beginning of the pandemic, and of those, 79% planned to continue to use them. Plus, we’re already seeing more SVODs experimenting with ad-supported options, such as Peacock TV, and likely HBO Max; Quibi is also experimenting with a free tier after its “quick bites” subscription failed to take off. We fully expect to see more SVODs introduce ad-supported tiers in the months ahead.
Trend 3: All clear
Telecom providers will reduce service complications and “gotchas” to make services, agreements, and communications clear and simple for customers. As part of this, they will offer more transparent plans and incorporate better proactive communications to help customer manage their services.
How’d we do? We got it right, but although providers have proven they are on the right trajectory when it comes to transparency and proactivity, there’s so much room to get better.
Telecoms made strides in improving transparency and reducing worry for consumers in 2020. New plans often featured more straightforward pricing and/or flexibility for consumers. For instance, Verizon Fios’s Mix & Match enables customers to change their services as needed, and removes the confines of contracts, even if it doesn’t go far enough in pricing transparency. Shaw’s new mobile service for Western Canada follows an easy and affordable pricing approach that mimics the successful US cable MVNOs.
But where telecoms really shone in reducing consumer worry and frustration, while providing real transparency, was in their response to the pandemic. They really stepped up when COVID-19 hit, introducing a slew of new features, offers, and forgiveness to help consumers stay connected at a time of uncertainty—and they did a great job of keeping customers informed.
As part of telecom providers’ efforts to help ease the stress of the pandemic, they were forthright and proactive in their communications. A regular cadence of emails, along with owned social posts, kept customers in the know about changing policies.
Consumers saw what their providers could do when it came time to help during COVID-19. And according to the Edelman Trust Barometer, it worked, helping to drive up consumer trust toward Canadian telecoms by 19 points and toward US telecoms by 12 points. We expect providers to work hard to build on these gains. As such, the competition is on to provide even better, clearer, more proactive customer service, which will continue to drive better customer experiences for consumers in the years ahead.