digital consumer analyzer insights on the uk connected market
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© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
October 2015
This report is part of Pyramid Research’s series of Analyst Insight Reports
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 2
About Pyramid Research Unparalleled coverage and unique bottom-up methodology backed by extensive primary research
Pyramid Research offers practical solutions to the complex demands in the global telecommunications, media and technology industries.
Our analysis is uniquely focused on the identification and assessment of growth opportunities within the telecoms value chain, by operator, market, sector, technology and business model.
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Robust network of thousands of industry executives leveraged for fact-based, in-depth research that is actionable and of high-quality
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The Pyramid Research difference Contextualization of best practices for your specific business
Advising leaders in the global communications industries on emerging growth opportunities
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Pyramid Research’s depth and breadth of geographic, sector and service provider coverage facilitate the identification of international best practices involving the most innovative and effective approaches worldwide to generating new revenue streams, cutting cost, and improving customer loyalty and experience.
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We work closely with each client to contextualize best practices and recommend most optimal approaches to their specific situation and county of operations. Our advice is practical, and we help our clients in assessing:
Their performance relative to the industry and best practice
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Strategies to improve their business, using the lessons from other players
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Pyramid Research’s coverage Our combination of breadth (100+ countries) and depth (750 KPIs/country) is unparalleled
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SECTION PAGE
Insights on the UK Connected Market
What is Pyramid Research Digital Consumer Analyzer 8 The UK connected market: Panel demographics 9 Awareness and adoption of main devices 10 Customer satisfaction with mobile and fixed broadband service providers 11 Customer satisfaction with fixed broadband service providers 12 Customer satisfaction with mobile service providers 13 Bundling with the fixed broadband service 14 4G service adoption and current barriers 15 Mobile devices: the most desired mobile phones 16 Mobile devices: the most important smartphone features 17 Applications and content 18 OTT and dual screen habits 19 Mobile payment 20 Wearables 21 Retail channels 22
Benchmarking analysis: Germany, Netherlands and UK Intent to change the fixed broadband service provider 24 Fixed broadband customer retention and loyalty benefits 25
Table of contents
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 6
Key recommendations for telecoms service providers 27 Sources and related materials 28
Stay ahead of the curve in a rapidly changing technology world
Deliverables 30 Key areas covered 31 Key services, applications and retail channels covered 32 Key questions answered 33 Digital Consumer Analyzer insights inform our five-year forecasts 34 Sample questions: awareness and adoption 35 Sample questions: fixed broadband and TV 36
SECTION PAGE
Table of contents
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
Pyramid Research Digital Consumer Analyzer
Insights on the UK Connected Market
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 8
Pyramid Research Digital Consumer Analyzer offers a unique and insightful view on the latest
consumer attitudes, perceptions and behaviours about the technology in their lives.
The study tracks more than 2,000 unique connected consumers per survey, per country from a nationally representative sample drawn from sister company Canadean’s online consumer panel. Panels are conducted on a quarterly basis.
Pyramid Research Digital Consumer Analyzer provides a holistic view of digital services by looking at different types of connectivity (including mobile, fixed broadband and pay-TV), different device types, different applications and flavors of content as well as retail channels and forms of payment.
Pyramid Research’s Digital Consumer Analyzer helps clients develop a competitive edge in developing new products and services, improve brand positioning and awareness, and redefine go-to-market strategies with most timely insights.
CONSUMER BEHAVIOR
AND PREFERENCES
LOYALTY AND
PROPENSITY TO CHURN
PROPENSITY TO PAY FOR
NEW SERVICES/ DEVICES
TECHNOLOGY ADOPTION
BRAND AWARENESS
CUSTOMER SATISFACTION
What is Pyramid Research Digital Consumer Analyzer?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 9
Young adults 29%
Mid-lifers 35%
Older Adults 36%
Male 49%
Female 51%
n=2,135
East Anglia East Midlands London Northern Ireland North East North West Scotland South East South West Wales West Midlands Yorkshire & Humberside
Pyramid Research Digital Consumer Analyzer for the UK market draws on a panel of 2,000+ unique respondents per quarter aged 18 or over, representative of the socio-demographic characteristics of digital service users across all regions in the country.
The UK connected market: Panel demographics
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 10
Awareness of wearable-tech and smart-watch is high – 64% and 76% of respondents respectively – helping to drive consumer adoption. 5% and 6% of respondents own a smart-watch and a fitness band, respectively as of Q3 2015. Smart-watch adoption is higher among O2 mobile customers (8%) and Sky fixed broadband customers (9%), while EE customers have a faster adoption of next generation video devices such as tablets, smart TVs and ultra HD TVs.
Awareness of mobile payment and tethering continued to increase in Q3 2015 and reached 65% and 48% of respondents, respectively. 38% of respondents confirmed having used a mobile payment app (mostly PayPal) while 46% lack trust in mobile payment applications.
EXHIBIT 1: DEVICE ADOPTION, UK, Q3 2015
Source: Pyramid Research Digital Consumer Analyzer. Which of the following do you own? (or use regularly in your household)
Awareness and adoption of main devices Wearables gain momentum and consumer attitudes towards mobile payment continues to improve, although trust still remains an issue for consumers.
Feature phone
Tablet
Smart TV HDTV
E-reader
Standard TV
Ultra HD TV
Satellite / cable
Laptop
Smartphone
Phablet
TV Gaming Console Fitness band
Smart-watch
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 11
Consumers of mobile services perceive a better “value for money” compared to fixed broadband customers. Price is the “best thing“ customers like about their mobile providers, followed by the availability of unlimited voice/text/data. The share of unhappy mobile customers is relatively low at 14%. O2 and Three have the highest level of very satisfied customers at
46% and 45% of customers, respectively. Conversely, price is the “worst thing“ consumers highlighted about their fixed broadband provider, with Virgin Media and BT scoring particularly low scores. High speed, by contrast, was well received by fixed broadband customers.
Customer satisfaction with mobile and fixed broadband service providers The level of customer satisfaction with fixed broadband service providers (79%) is lower than that with mobile service providers (86%).
EXHIBIT 2: CUSTOMER SATISFACTION WITH MOBILE PHONE PROVIDERS, UK, Q4 2014-Q3 2015
EXHIBIT 3: CUSTOMER SATISFACTION WITH FIXED BROADBAND PROVIDERS, UK, Q4 2014-Q3 2015
Source: Pyramid Research Digital Consumer Analyzer. How satisfied are you with your fixed broadband provider?
Source: Pyramid Research Digital Consumer Analyzer. How satisfied are you with your mobile phone provider?
13% 10% 11% 11%
41% 45% 44% 46%
42% 42% 41% 40%
Q4 2014 Q1 2015 Q2 2015 Q3 2015
Very unsatisfied Unsatisfied Neither satisfied nor unsatisfied Satisfied Very satisfied
13% 11% 13% 15%
42% 42% 44% 45%
40% 42% 38% 34%
Q4 2014 Q1 2015 Q2 2015 Q3 2015
Very unsatisfied Unsatisfied Neither satisfied nor unsatisfied Satisfied Very satisfied
86% 79%
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 12
All fixed broadband providers had a decline of customer satisfaction (combined share of “very satisfied“ and “satisfied“ customers) between Q1 2015 and Q3 2015: -14ppt for TalkTalk (to 69%), -5ppt for Sky (to 80%), -4ppt for both BT (to 77%) and EE (to 74%). The decline was lower for Virgin media (-2ppt to 88%) which maintains the highest customer satisfaction. The
main driver of this decline is related to reduced satisfaction with customer service and technical support, particularly in the case of Virgin Media and EE. However, speed and the reliability of the broadband connection are increasingly appreciated by Virgin Media’s customers, and this offsets the reduced satisfaction with customer service and technical support.
Customer satisfaction with fixed broadband service providers At the market level, the combined share of “very satisfied“ and “satisfied“ customers declined to 79% in Q3 2015, from 82% in Q2 2015 and 84% in Q1 2015. 18% of broadband customers are looking to change their broadband provider.
EXHIBIT 4: SHARE OF VERY SATISFIED AND SATISFIED CUSTOMERS, UK, Q4 2014-Q3 2015
EXHIBIT 5: CUSTOMER SATISFACTION WITH INDIVIDUAL FIXED BROADBAND PROVIDERS, UK, Q3 2015
Source: Pyramid Research Digital Consumer Analyzer. How satisfied are you with your fixed broadband provider?
17% 16% 18%
9% 21%
49% 43%
43%
48% 41%
28% 37% 26%
40% 33%
BT Sky TalkTalk Virgin Media EE
Very unsatisfied Unsatisfied Neither satisfied nor unsatisfied Satisfied Very satisfied
Source: Pyramid Research Digital Consumer Analyzer. How satisfied are you with your fixed broadband provider?
82% 84%
82%
79%
Q4 2014 Q1 2015 Q2 2015 Q3 2015
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 13
86% of mobile consumers are happy with their mobile phone provider. Price is the “best thing“ they like about their mobile providers (59% of respondents). The quality of the call (29%) and good customer service (19%) are also important. Free data is what people would appreciate the most. The improvement for O2 may be the result of an enhanced positioning of its 4G
offer (speed of mobile Internet and unlimited data are now more appreciated). Customer satisfaction with Three was 84%; 62% of its customers think price is the best thing about Three, followed by unlimited data included (27%). Ability to use tariffs abroad is also a key element for the company (15%).
Customer satisfaction with mobile service providers Customer satisfaction levels remain largely unchanged over the last six months, with O2 enjoying the highest satisfaction ratings with 89% of customers satisfied or very satisfied with their provider.
Source: Pyramid Research Digital Consumer Analyzer. How satisfied are you with your mobile phone provider?
EXHIBIT 6: SHARE OF VERY SATISFIED AND SATISFIED CUSTOMERS, UK, Q4 2014-Q3 2015
EXHIBIT 7: CUSTOMER SATISFACTION WITH INDIVIDUAL MOBILE PROVIDERS, UK, Q3 2015
83%
87% 85%
86%
Q4 2014 Q1 2015 Q2 2015 Q3 2015
9% 8% 13% 13%
46% 43% 45% 39%
39% 46% 38% 45%
EE O2 Vodafone Three
Very unsatisfied Unsatisfied Neither satisfied nor unsatisfied Satisfied Very satisfied
Source: Pyramid Research Digital Consumer Analyzer. How satisfied are you with your mobile phone provider?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 14
TV continues to be the closest “service partner“ for consumers who already have a broadband subscription; 10% of respondents would like to have TV on-demand as part of a bundled broadband service and 8% would like to have linear TV (satellite, cable or IPTV).
The number of consumers expressing a desire to include mobile services into their fixed broadband bundle was 9% in Q3 2015, 14% for Sky customers who give higher-than-average importance to mobile Sport apps (Sky Sports Mobile), and only 6% for Virgin Media customers who are more interested in triple play bundles.
Home insurance (5%) and home security (4%) continue to gain attractiveness, and energy services bundled with fixed broadband seem relatively desired as well (6% of respondents would like to have electricity as part of a bundled broadband tariff; 4% would like to have gas).
EXHIBIT 8: CONSUMER PREFERENCE FOR BUNDLED SERVICES WITH FIXED BROADBAND, UK, Q3 2015
Bundling with fixed broadband service Fixed broadband-TV remains the most preferred bundle. Home insurance and home security continue to gain attractiveness.
Total
Phone insurance 4% 3% 3% 5% 4% 4%
Car insurance 5% 3% 6% 6% 4% 6%
Gas 4% 3% 5% 5% 4% 2%
Electricity 6% 5% 6% 6% 5% 5%
Mobile phone 9% 8% 14% 7% 6% 10%
Mobile phone insurance
5% 4% 7% 5% 4% 6%
Home insurance 5% 3% 6% 8% 5% 5%
Home security 4% 4% 6% 3% 5% 4%
TV/satellite/cable service
8% 9% 8% 8% 7% 5%
TV on demand 10% 9% 8% 9% 13% 7%
Water 3% 2% 6% 3% 3% 3%
Other 0% 0% 1% 0% 0% 1%
None 66% 69% 62% 66% 66% 64%
Source: Pyramid Research Digital Consumer Analyzer. As part of a bundled broadband tariff, which of the following services would you like to have but are not offered currently?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 15
Our Q3 2015 survey exhibits an acceleration of 4G service adoption for Vodafone customers in particular, rising from 25% to 35%, suggesting that the operator had another strong quarter of LTE net additions, after adding 1.7m in Q2 2015. The main barriers to 4G adoption remain the high cost of a 4G price plan and the fact that 3G speeds are perceived to be sufficient by low-usage data subscribers.
EXHIBIT 9: BARRIERS FOR ADOPTING 4G SERVICES, UK, Q3 2015
4G service adoption and current barriers 4G moves beyond early-adopter status as LTE adoption reaches 30% nationwide in Q3 2015, consistent with supply-side results that yield a 28% 4G penetration rate as of Q2 2015.
0% 5% 10% 15% 20% 25% 30% 35% 40%
I have Unlimited 3G Price plan
3G is fast enough for what I use it for
It’s too expensive
I’m worried about the data I will use
The 4G tariffs don’t offer enough data
I can’t change tariff yet
Don’t understand 4G benefits
I’m not sure if my phone is 4G capable
My phone is not 4G capable
I’m waiting to see a phone I like Three O2 Vodafone EE Total
Source: Pyramid Research Digital Consumer Analyzer. Which is the most likely reason why you don’t currently have a 4G price plan?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 16
24% of mobile phone users were looking to replace their handset in the next six months, showing a decrease from the previous two quarters. O2 and Three customers had the highest percentage (both at 30%). Since price was the second most important attribute considered by smartphone buyers, 58% of the respondents would consider buying a discounted refurbished handset.
Both Apple and Samsung brands enjoy high purchase intent scores. Considering they are also the most used, the high intent shows both the desirability of these devices and the brand loyalty of their users.
The Apple iPhone 6 leads the rank of “which of the following mobile phones are you looking to change to“ (16% of respondents), followed by the iPhone 5S (15%) and the iPhone 5C and the Samsung Galaxy S6 Edge (both at 10%).
EXHIBIT 10: PURCHASE INTENT FOR MOBILE PHONES, UK, Q3 2015
Mobile devices: the most desired mobile phones iPhones are more desired than Samsung phones. This is reflected in Pyramid Research’ smartphone sales forecasts: Apple will account for 28% of the cumulative smartphone sales during 2016-2020, compared to 22% for Samsung.
16%
15%
10%
10%
9%
9%
9%
8%
8%
5%
5%
4%
4%
3%
3%
Apple iPhone 6
Apple iPhone 5S
Apple iPhone 5C
Samsung Galaxy S6 Edge
Samsung Galaxy S6
Apple iPhone 6S
Apple iPhone 6 Plus
Apple iPhone 6S plus
Samsung Galaxy S6 Edge Plus
Samsung Galaxy S5
Samsung Galaxy S6 Plus
Samsung Galaxy S5 Mini
Nokia Lumia 1520
Samsung Galaxy Note 4
Nokia Lumia 635
Source: Pyramid Research Digital Consumer Analyzer. Which of the following mobile phone(s) are you looking to change to?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 17
Quarter-on-quarter, there has been little change in the importance of features when looking to purchase a smartphone – service tariff (84%), handset price (82%) and battery life (81%) remain the most important considerations. Screen quality/resolution, device durability, sound quality and screen size were also highlighted as important by more than 60% of the responders.
4G capability relevance has been increasing progressively quarter-on-quarter; however it remains much lower than other features. Pyramid Research forecasts that 4G will account for 40% of total mobile subscriptions at the end of 2015, and 70% by the end of 2020, or about 90% excluding M2M SIM cards.
The upfront cost (80%), the quality of the touch-screen (79%) and the simplicity of the screen keyboard (73%) remain key features for consumers considering the purchase of a new tablet.
EXHIBIT 11: IMPORTANCE OF SMARTPHONE FEATURES, UK, Q3 2015
Mobile devices: the most important smartphone features Service tariff, handset price and battery life remain the most considered areas when purchasing a new smartphone. 4G relevance has been increasing progressively quarter-on-quarter.
Screen size
64%
Battery life
81%
4G capable
38%
App availability
42% Operating system
56% Physical keyboard:
Lack of 40%
Availability 27%
Camera: Resolution 59%
Low light functionality 50%
Phone size
62%
Weight
45% Handset price
82%
Tariff
84%
Sound quality
63%
Screen quality/ resolution
66%
Brand
48%
Storage : Internal 60%
Add on/remove 39%
Scores for top 2 boxes: ‘Extremely important’ + ‘Important’
Durability/ruggedness/Stronger Screen
65%
Source: Pyramid Research Digital Consumer Analyzer. How important are the following when buying a smartphone?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 18
Around one-fifth of the respondents said they would like to have Amazon Prime (22%), Netflix (21%) or Sky Sports Mobile 19%) bundled into their mobile subscription plan.
Netflix as an added value option is particularly important for Three customers (28% of respondents) as they give high importance to data services and lower-than-average importance to voice and messaging services.
Facebook remains the most popular app with 72% of the respondents highlighting it as the most used application, followed by Google Maps (29%) and WhatsApp (27%).
While the use of Facebook and WhatsApp remained stable quarter-on-quarter, the use of Google Maps has been declining over time, probably due to a growing adoption of maps provided by other players.
EXHIBIT 12: ADDITIONAL SERVICES FOR SMARTPHONES, UK,Q3 2015
Applications and content Mobile phone users show a clear preference for video over other types of content, such as music. Amazon Prime, Netflix and Sky Sports Mobile are the preferred OTT video platforms. Facebook remains the most popular app.
Total
Sky Sports Mobile 19% 27% 15% 22% 13% 12% 19% 16%
Spotify 9% 12% 6% 10% 8% 9% 10% 27%
Deezer 1% 1% 0% 3% 2% 0% 0% 0%
Amazon Prime 22% 19% 26% 23% 21% 25% 19% 41%
Netflix 21% 19% 21% 18% 28% 27% 20% 16%
LoveFilm Instant 3% 3% 3% 2% 5% 1% 1% 0%
Other subscription based service 1% 0% 2% 1% 1% 1% 2% 0%
Unlimited Facebook 9% 8% 12% 8% 6% 11% 8% 0%
Unlimited YouTube 4% 4% 3% 4% 7% 3% 5% 0%
Unlimited WhatsApp 4% 4% 5% 5% 4% 4% 4% 0%
Unlimited Twitter 1% 1% 1% 0% 1% 1% 2% 0%
Other unlimited service 6% 4% 6% 7% 4% 7% 8% 0%
Source: Pyramid Research Digital Consumer Analyzer. Which subscription based or unlimited access would you most like bundled with your phone as an added value option?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 19
Around 57% of the respondents in the survey use a second screen while viewing content on their main TV set. Laptops were the preferred device for this purpose (37%), followed by smartphones (26%) and tablets (23%). When asked about the main reason for dual-screening, accessing social media platforms was the main one (43% of respondents), followed by researching information (38% of respondents). There has been a steady decline in the number of viewers using dual screening to “kill time during adverts”, which has fallen from 32% (Q1 2014) to 23% (Q3 2015). We attribute this decline to a shift in viewing habits from traditional linear broadcasting to on-demand viewing, which includes less or no advertising at all.
EXHIBIT 13: DUAL SCREEN HABITS, UK, Q1 2014-Q3 2015
OTT and dual screen habits 27% of respondents subscribe to an on–demand OTT video platform in addition to their main pay-TV subscription, and 11% have paid for on-demand video in the last three months.
Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2’15 Q3’15
Smartphone 18% 22% 25% 24% 23% 26% 26%
Tablet 20% 24% 21% 26% 26% 23% 23%
Phablet 1% 1% 1% 1% 1% 1% 2%
Laptop 42% 40% 39% 36% 36% 37% 37%
Desktop PC 15% 11% 12% 11% 12% 10% 10%
Other 4% 3% 2% 2% 2% 2% 1%
Q37&Q38
Source: Pyramid Research Digital Consumer Analyzer. On which device do you dual-screen the most?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 20
According to the survey, 62% of mobile phone users found the idea of swapping their credit/bank cards for mobile payments methods appealing, although trust still remains an important area of concern for consumers - around 46% of the respondents declared a lack of trust in mobile payments applications, while only 23% said they trusted this payment method.
38% of respondents confirmed having used a mobile payment application, with 35% having used the PayPal payments app. O2 customers exhibit higher rates of payment application usage, with 42% of O2 users having used a payment application.
In Q3 2015, the proportion of consumers using internet banking remained stable at 79%. Mobile phones were the primary device used to access mobile banking apps, used by 34% of the respondents, while tablets were used by 22% of respondents.
EXHIBIT 14: MOBILE PAYMENT APPS USAGE, UK, Q3 2015
Mobile payment Consumer attitudes towards mobile payment solutions continue to improve, although trust still remains a significant concern. Mobile phones were the primary device used to access mobile banking applications in Q3 2015.
Total
Pingit 3% 3% 3% 5% 1% 5% 1% 0%
PayPal 35% 34% 38% 34% 37% 31% 36% 51%
SmartPass 1% 1% 0% 0% 0% 0% 2% 0%
MasterPass 1% 1% 1% 2% 0% 1% 1% 0%
CASH ON TAP 1% 1% 1% 2% 0% 0% 1% 0%
Pay m 1% 0% 3% 2% 1% 2% 0% 17%
ZAPP 0% 0% 0% 2% 0% 0% 0% 0%
Other 1% 0% 1% 0% 1% 1% 0% 0%
Don’t use Mobile Payment Apps
62% 62% 58% 61% 62% 64% 63% 49%
Source: Pyramid Research Digital Consumer Analyzer. Which of the following Mobile Payment Apps do you use?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 21
Two-thirds of survey respondents were familiar with wearable-tech and three-fourths were familiar with smart-watches in Q3 2015. Awareness of fitness bands (added in Q3 2015) stood at 61% of respondents, as high as WhatsApp’s awareness level 12 months ago. In terms of adoption, Smart-watches were used by 5% of respondents while fitness bands were used by 6%, demonstrating little change from Q2 2015. Smart-watch adoption is higher among O2 mobile customers (8%) and Sky fixed broadband customers (9%).
EXHIBIT 15: AWARENESS OF WEARABLES, UK, Q3 2015
Wearables Awareness of wearable-tech and smart-watch remains high, though it is no longer making the significant jumps it was making in earlier quarters, reflecting the technologies’ evolution from early adopter status to mainstream.
Wearable-tech Smart-watch Fitness Band
Q1 2014: 21%
Q1 2014: 42%
Q1 2014: N/A
Q2 2014: 30% Q2 2014: 53% Q2 2014: N/A
Q3 2014: 47% Q3 2014: 60% Q3 2014: N/A
Q4 2014: 44% Q4 2014: 67% Q4 2014: N/A
Q1 2015: 57% Q1 2015: 71% Q1 2015: N/A
Q2 2015: 66% Q2 2015: 78% Q2 2015: N/A
Q3 2015: 64% Q3 2015: 76% Q3 2015: 61%
Source: Pyramid Research Digital Consumer Analyzer. Have you heard of any of the following?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 22
UK consumers show a strong preference for high-street network provider stores when it comes to acquiring a new smartphone, mobile phone or phablet. Tablet buyers, instead, had a greater preference for high-street general electronics stores and online supermarket channels.
When asked specifically about frustrations when shopping for devices, the top area for both bricks-and-mortar and online stores buyers was the lack of clarity in the choice of tariffs. This was highlighted by 20% and 16% of the respondents in each category, respectively.
The second most important source of frustration highlighted by shoppers in bricks-and-mortar stores was the lack of special offers (19%) while, for online customers, the second most important source of frustration was having to pay for delivery fees (16%).
EXHIBIT 16: CHANNEL OF NEXT SMARTPHONE PURCHASE, UK, Q2 2014-Q3 2015
Retail channels The preference for high-street network provider stores declined further to 25% in Q3 2015. Despite the decline, this channel remains consumers’ preferred choice when purchasing a new smartphone, mobile phone or phablet.
Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ’15 Q2 ’15 Q3 ’15
Store – network provider 20% 20% 27% 29% 27% 25%
Store – manufacturer 4% 6% 6% 8% 7% 7%
Store – general electronics retailer 3% 3% 3% 4% 5% 4%
Store – device specialist retailer 10% 12% 10% 9% 12% 10%
Supermarket – in-store 4% 4% 3% 5% 4% 6%
Online Store – network provider 19% 16% 17% 15% 13% 14%
Online Store – manufacturer 3% 4% 3% 3% 2% 3%
Online Store –electronics retailer 7% 5% 4% 7% 5% 6%
Online Store – specialist retailer 7% 9% 6% 8% 6% 5%
Online Store – supermarket/other N/A N/A 2% 0% 8% 10%
Telephone – network provider 8% 9% 6% 5% 5% 6%
Telephone – manufacturer 1% 0% 0% 1% 0% 0%
Telephone – electronics retailer 0% 0% 0% 0% 0% 0%
Telephone – specialist retailer 2% 1% 0% 0% 1% 0%
Will purchase second hand 3% 3% 3% 3% 2% 2%
Other 6% 6% 5% 1% 1% 2%
Don’t know 0% 0% 1% 2% 0% 0%
Won’t buy again 3% 3% 3% 1% 1% 1%
Source: Pyramid Research Digital Consumer Analyzer. Where do you think you will purchase your next device?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
Pyramid Research Digital Consumer Analyzer
Benchmarking analysis:
Germany, Netherlands and UK
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 24
Intent to change the fixed broadband service provider
11% 13% 17%
Germany Netherlands UK
The reliability of the broadband connection and the quality of the customer service seem to be the main drivers behind the slightly lower customer satisfaction of UK customers compared to their counterparts in Germany and in the Netherlands.
In terms of bundling with fixed broadband, Germany customers show a greater preference for mobile (14% of respondents) and linear TV (11%) services, while UK customers show greater interest in services less commonly offered by broadband providers, such as insurance and/or utilities (gas, electricity and water).
EXHIBIT 18: CONSUMER PREFERENCE FOR BUNDLED SERVICES WITH FIXED BROADBAND, Q2 2015
EXHIBIT 17: FIXED BROADBAND CUSTOMERS, INTENT TO CHANGE SERVICE PROVIDER, Q2 2015
Source: Pyramid Research Digital Consumer Analyzer Are you considering changing broadband provider in the next six months? (Yes)
Germany Netherlands UK
Phone insurance 4% 3% 5%
Car insurance 3% 2% 6%
Gas 2% 2% 5%
Electricity 4% 3% 7%
Mobile phone 14% 10% 11%
Mobile phone insurance
8% 5% 8%
Home insurance 4% 2% 6%
Home security 4% 7% 6%
TV/satellite/cable service
11% 6% 9%
TV on demand 8% 9% 9%
Water 3% 2% 5%
Other 1% 1% 0%
None 57% 67% 63%
UK consumers show a higher intent to change their fixed broadband service provider than their counterparts in Germany and in the Netherlands.
As part of a bundled broadband tariff, which of the following services would you like to have but are not offered currently?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 25
Fixed broadband customer retention and loyalty benefits
Customer preference for free loyalty benefits varies significantly country by country. For example, higher speeds, free devices such as tablets or guaranteed antivirus protection are key drivers for German customers to carry on with their broadband contract. UK and Dutch customers are more attracted by free subscriptions to popular premium TV streaming services. Another benefit, more desired in the UK than in other compared countries, is access to Wi-Fi hotspots, which allow subscribers to use provider’s broadband network outside of their households for free.
3% 6% 11%
16% 13% 9%
17% 15% 12%
9% 21%
27%
36% 25% 27%
Germany Netherlands UK
Other Access to WiFi “On the Go” or Operator/private hotspots Premium customer support Premium content and add in Exclusive Content Antivirus protection Add in Free Device (e.g. Tablet) Access to TV streaming services (Netflix, Amazon Prime, sports) Higher speeds
EXHIBIT 19: FREE LOYALTY PREFERENCES, Q2 2015
German customers are more interested in higher speeds and free devices, while Dutch and UK customers show a greater preference for free subscriptions to popular TV streaming services and access to free Wi-Fi hotspots.
Source: Pyramid Research Digital Consumer Analyzer If your broadband provider were to provide one of the following services as a free loyalty benefit to keep you on their contract, which would be most appealing to you?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
Pyramid Research Digital Consumer Analyzer
Key recommendations for
telecoms service providers
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 27
Mobile service providers
• Influence consumer behavior and position value-added services – the price of mobile services and promotions/discounts on mobile devices and services continue to be the most important motivations when choosing a mobile service provider. However, the benefits of 4G are now clearer than a few quarters ago (although the cost of 4G devices and services remains the biggest barrier for migrating from 3G to 4G) and an increasing number of consumers are looking for quality-related attributes – such as speed of mobile Internet and network reliability – and extra services such as content and applications. The ability to use domestic tariffs abroad (roaming) is well appreciated and can be considered as a value-added service.
• Move beyond connectivity – consumers are increasingly keen to have content bundled with their mobile phone/service as an added value option. Sport, music and e-commerce are the most preferred subscription based contents (Netflix, Sky Sports Mobile, Amazon Prime, Spotify). Content may attract high-value consumers and drives migration from 3G to 4G, thus generating an ARPS uplift.
Fixed and Pay-TV service providers
• Communicate the benefits of bundled services – the number of consumers who don’t want to have additional services as part of a bundled broadband tariff is still high (66% of respondents in Q3 2015) because the price of the broadband service is considered high and any extra service may further increase it. However, high-value customers seem keen to get bundles of fixed, mobile and TV, and bundles of broadband with non-telecoms services such as insurance (car, home), security (home) and utilities (electricity, gas and water). Operators should focus on communicating the value of these bundles and unlock the consumer “price” concern. Content bundled with broadband are as important as content bundled with mobile.
• Free loyalty program – customer intent to change the broadband provider was 18% in Q3 2015, 4 percentage points higher than in Q3 2014. Offering free loyalty benefits adds value to the broadband offer and helps to differentiate from competitors. Anti-virus protection is the most preferred service in the UK (21% of respondents), followed by Amazon Prime (10%) and a free device such as tablet (9%).
Key recommendations for telecoms service providers
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 28
Sources and related materials Pyramid Research Digital Consumer Analyzer – UK Q3 2015
Pyramid Research Digital Consumer Analyzer is a unique and insightful view on the latest attitudes, perceptions and behaviors of how consumers use technology in their lives. This report and accompanying data annex provides insights on awareness and adoption, mobile, fixed, pay-TV, devices, retail channels, applications and content, mobile money and payments, for the UK digital consumer market.
Pyramid Research Digital Consumer Analyzer – Germany Q2 2015
Pyramid Research Digital Consumer Analyzer is a unique and insightful view on the latest attitudes, perceptions and behaviors of how consumers use technology in their lives. This report and accompanying data annex provides insights on awareness and adoption, mobile, fixed, pay-TV, devices, retail channels, applications and content, mobile money and payments, for the German digital consumer market.
Pyramid Research Digital Consumer Analyzer – Netherlands Q2 2015
Pyramid Research Digital Consumer Analyzer is a unique and insightful view on the latest attitudes, perceptions and behaviors of how consumers use technology in their lives. This report and accompanying data annex provides insights on awareness and adoption, mobile, fixed, pay-TV, devices, retail channels, applications and content, mobile money and payments, for the Netherlands digital consumer market.
Pyramid Research Fixed Communications Forecasts – Q3 2015 The Fixed Communications Forecast quantifies fixed voice, broadband and IPTV adoption and service revenue trends, at the residential, corporate and total market levels. It tracks demand and projects future growth for 101 markets worldwide and is available at the country, regional and global levels. This product is updated quarterly.
Pyramid Research Mobile Data Forecasts – Q3 2015 Mobile Data tracks current and future demand for mobile data services, within the context of overall mobile demand. This forecast quantifies current and future demand and spending on mobile voice and data services and breaks down mobile data ARPS, revenues and subscriptions at the service level. It is available for 101 markets worldwide at the country, regional and global levels. This product is updated quarterly.
CLIENT CONFIDENTIAL
© 2015 Pyramid Research. All rights reserved. No material contained in this report may be reproduced in whole or in part without the prior written permission of the publisher. Neither the information nor the opinions expressed in the report should be construed as a recommendation for the purchase or sale of any security. The information contained in this report has been obtained from sources we believe to be reliable, but neither its completeness nor accuracy can be guaranteed. Opinions expressed are based on our interpretation of the available information and are subject to change.
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
Pyramid Research Digital Consumer Analyzer
Stay Ahead of the Curve in a Rapidly
Changing Technology World
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 30
Deliverables
For each country, Pyramid Research provides a comprehensive PPT-report including insight and analysis derived from the survey and implications for our five-year market outlook and forecasts.
Excel data file of 50,000+ unique data points derived from the survey.
The Digital Consumer Analyzer can be customized through the inclusion of questions specific to the customers’ areas of interest.
TABLE OF CONTENTS
Executive summary
Key changes since last quarter
Survey results and key takeaways
i. Awareness and adoption
ii. Mobile
iii. Fixed
iv. Pay-TV
v. Devices
vi. Retail channels
vii. Applications and content
viii. Mobile money and mobile payments
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 31
Key areas covered
Awareness and Adoption What customers know about the technology available: services, devices and applications.
Mobile
Usage and adoption trends for online and mobile payments. Mobile Money & Payments
Service adoption by operator, age group, gender and technology (4G/LTE); and customer satisfaction levels
Pay-TV
Fixed Broadband adoption, operator market share and customer satisfaction levels.
Usage trends for pay-TV services and technology in the home.
Devices
Retail Channels Preferred retail channels for mobile phones, smartphones and tablets.
Applications and Content Consumption levels for applications, content and services by gender and type of device.
Adoption, preferences, buying influences, future purchase intent/switching by device type.
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 32
Key devices covered
SMARTPHONES FEATURE PHONES
DEVICES AND TECHNOLOGIES COVERED
SERVICES
Ultra HDTV HDTV GAMING
CONSOLES
FITNESS BAND
COMPUTER
E-READERS SMART TV SMARTWHATCH
STANDARD TV
PHABLETS
MiFi MODEMS
TABLETS
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 33
Key services, applications and retail channels covered
SERVICES
PAY-TV MOBILE
PAYMENTS BROADBAND MOBILE OTT VIDEO
RETAIL CHANNELS APPLICATIONS
SOCIAL NETWORKNIG
PAYMENTS CONTENT ONLINE TRADITIONAL
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 34
Key questions answered
What is the multi-device path-to-purchase that consumers take?
Which are the most effective channels to connect with consumers?
What are the key
features and functionalities consumers do not want to miss?
DIGITAL CONSUMER
Analyzer
How do consumers use technology to find out about different digital brands and services?
What is the consumer sentiment saying about services and data provided by different brands?
What are the products and services consumers want right now?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 35
Digital Consumer Analyzer insights inform our five-year forecasts
BACKGROUND PRIMARY RESEARCH FRAMEWORK RESULTS
PYRAMID RESEARCH FIVE-YEAR FORECAST
Pyramid Research’s industry-leading forecasts are based on a combination of supply-side research conducted with high-level executives within the service provider, vendor, content and regulatory communities; as well as demand-side research conducted with end-users that bring consumer preferences, brand awareness, propensity to churn and willingness to spend to bear.
PYRAMID ANALYSIS
MACRO AND DEMOGRAPHIC
KPIS
SUPPLY-SIDE RESEARCH
WITH OPERATORS,
VENDORS, CONTENT
PROVIDERS & REGULATORS
DEMAND-SIDE RESEARCH
WITH DIGITAL CONSUMERS
(2,000+ USERS)
SECONDARY RESEARCH
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 36
Sample questions: awareness and adoption
Which of the following devices do you own or use regularly in your household?
Have you heard of any of the following devices/services/technologies?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 37
Sample questions: mobile
Which service/content would you most like bundled with a mobile phone/ tablet as a value-added option?
Which is the most likely reason why you don’t currently have a 4G price plan?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 38
Sample questions: fixed broadband and TV
Are you considering changing broadband provider in the next six months?
When you selected your broadband provider, what was the main reason?
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market 39
About Pyramid Research
ADVISING LEADERS IN THE GLOBAL COMMUNICATIONS INDUSTRIES ON EMERGING MARKETS AND SERVICES OPPORTUNITIES
Pyramid Research (www.pyramidresearch.com) offers practical solutions to the complex demands our clients face in the global communications industry. Its analysis is uniquely positioned at the intersection of emerging markets, emerging technologies and emerging business models, powered by the bottom-up methodology of our market Forecasts for more than 100 countries — a distinction that has remained unmatched for nearly 30 years.
HOW WE COVER COMMUNICATIONS MARKETS
Our highly structured analysis closely examines the performance, technology trends, macroeconomic and regulatory environment, of service providers and equipment vendors in each of the more than 100 countries we cover. Using a bottom-up approach, we size market demand across services and countries, and conduct end-user surveys to validate adoption trends and anticipate shifts in demand. Our commitment to intensive, direct interviewing of regulatory authorities, service providers and manufacturers — complemented with end-user data — ensures the most reliable portrait of every market we examine.
© 2015 Pyramid Research | Pyramid Research Digital Consumer Analyzer: Insights on the UK Connected Market
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