Bundled packages wrap up communications market

Mintel research indicates that as around half of all UK households will be signed up to bundled communications services by the end of the year, so the scenario will change quite dramatically.

Over the last five years alone, there has been a six-fold increase in the value of the triple-play communications (phone, television & broadband services) market. Valued at £490 million (about R5.6 billion) in 2005, the triple-play market is set to reach in excess of £3 billion (£3,330 billion - about R38 billion) by 2010. Expansion in provider and package numbers, coupled with the prospect of savings to be made by taking multiple communications services from a single supplier, has driven major consumer interest in bundling.

Bundles growing

While bundling is growing generally, research suggests that the triple-play business has been gaining more from dual-play buyers trading up in the recession than from newcomers buying in at that level straight away. And while the largest proportion of these bundled packages remains dual-play, double-digit growth in the triple-play sector is expected to be sustained. By 2015, sales will have reached almost £5.9 billion (about R67.5 billion), a growth of 77% over the next five years.

Matt King, senior leisure analyst at Mintel, said: "Take-up rates have undoubtedly been assisted by consumers' response to the recession in seeking to reduce household bills, making the economics of bundling more attractive and the mechanics of switching seems less of a burden than might previously have been the case. The sector has also been driven by the recession-related rise of in-home leisure, which has increased consumers' attachment to 'essential' internet and pay-TV services - bundling has proved a way of retaining these core entertainment technologies on a more economic basis."

Exclusive consumer research finds that price is the most important driver in the market, with nearly half (49%) of bundle users saying they opted for the cheapest deal available. Convenience of having bills in one payment (41%) and trust in the provider's brand (40%) make up the top three reasons for choosing a particular provider.

Consumers choose services on price

"Focus on bundle value has led consumers to choose services on price ahead of any other factor, with convenience the second-biggest influence on purchasing decisions. This combination of drivers has moved communications alongside power utilities as 'chore purchases' to be made as cheaply and as hassle-free as possible." King continues.

In terms of most sought after elements, the fixed-line internet connection is now by far the most important element of the home communications services bundle, a priority for almost half (46%) of consumers.

"Anticipated developments in the reach of broadband technology - both geographically and in enabled device numbers - are likely to entrench the dominance of the web further still, particularly if providers can open consumers' eyes to the full range of services it can deliver. In the longer-term, technological change is the force most likely to shift consumer perceptions of bundled home communications services away from being a boring-but-necessary, price-led utility purchase to being an aspirational home entertainment or leisure buy. Over the medium term, the focus should shift from quantity to quality - from how many services our bundles can buy to what sort of services they can bring us." King concludes.