Consumers won’t mind paying for things they love
May 26, 2021 - Frank Healy
5G provides an opportunity to provide a diversity of services for which users will pay. Diversity driven by partnerships will matter most.
Before lockdowns and shop closures, I recall a sign over a shop in London that read: “The Quality Remains Long After the Price is Forgotten”. Like a warning or at least a setting of expectations, it implied that everything is strictly on a linear price-quality continuum.
It’s not as straightforward in the tech world and perhaps more generally. The app-stores stuffed with “free” versions changed things. Sure, the phones cost a fair bit as did the phone subscriptions – but after that things were pretty much free. The odd premium app or subscription got added but those were either once-off or had opt-outs.
Over time however users have been bombarded with free content, not to mention free advice. The quality is often questionable and the volume is limitless. The pandemic has made many people reconsider how to better use their time and money. After all, there is no limit to free content and services but time itself is limited. To bolster revenues, advertisers constantly look at more imaginative ways to attract eyeballs. One recent example is the digital addition of product placement into old movies. Though hardly believable to purist movie buffs, done subtly it may indeed provide benefits to all concerned and wider access to older content.
Everyone’s a winner from this kind of innovation, right? Users get access to what they want, cheaply or for free and advertisers push more product. The tendency however is to over-milk existing revenue streams to the point of exhaustion. Anyone who’s been using free video channels will have noticed increased interruption from advertising in the past couple of years. The advertisers and advertising-technology companies’ shareholders demand such intense use of existing technology that it results in jaded, frustrated and less loyal end-users.
The tipping point with advertising has started to manifest in a number of ways. The success of ad-free Netflix is just another symptom. More recently, Apple has slapped limitations on advertisers, or rather provided opt-outs for end-users, in its latest version of iOS. Privacy concerns are also on the rise. The move to online everything has proven that users are often willing to pay for a subscription or on a one-time basis for services that are really stand-out and are highly relevant. As mobile operators diversify their own businesses thanks to the disruptive benefits available from 5G, this is really good news. The seeming saturation and noisiness of “free” or at least “first generation free” is a further opportunity for them to look at their markets afresh.
The ability of users to purchase smoothly and opt-in cleanly to innovative 5G-enabled services will be key. The ecosystem of partners that service providers enable will perhaps matter most of all. It’s been a while since some telco providers have truly excited a wide range of age groups. Perhaps for such service providers their best strategy will be enablement of partners that are more in the “excitement industry”. Such service providers can then focus on the cleverly supportive elements of entertainment such as SLA-management, network scaling and control and of course flexible charging of end-users by those partners via exposed APIs.
For some service providers still reliant on smartphone upgrades this diversification will be an overwhelming challenge. Traditional segmentation such as pre-paid and post-paid matter less when the service is more important than the mechanism of payment or the device used to consume it. Seamless payment for a wider range of services with differing criteria for pricing will however still really matter. A connected car probably won’t be priced the same way as a VR-based travel guide.
Advertising as a form of subsidy won’t disappear. There is still room for a variety of pricing models and the quality versus price battle will rage on. Keeping in touch with what consumers really want and are willing to pay for, amid 5G-driven service diversity, seems more important than ever.
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