How much revenue will digital partnerships generate?

December 17, 2019 - Martin Morgan

Openet and surveyed 520 telecoms professionals to get their views on the importance of partnerships in digital transformation.

In June this year US consulting firm eMarketer published a survey that showed that Americans spend more time on smartphones that watching TV. On average American adults spend 3 hours and 43 minutes per day on phones and tablets. This is 8 more minutes than they’ll spend watching TV.  Interestingly enough the smartphone usage studied didn’t include voice calls. People were spending 30% of their time on audio apps (music and podcasts), 24% on social networks and video based apps accounted for 19% of usage.

In China, time spent on mobile phones surpassed time spent watching TV in 2018. According to eMarketer, “Adults in China will spend 2 hours, 39 minutes a day on mobile devices in 2018, up 11.1% over last year, accounting for 41.6% of their daily media time. By comparison, adults will spend 2 hours, 32 minutes per day watching TV, down 2% over 2017, representing 39.8% of daily media time”.

You get the picture. While the above seems blindingly obvious to anyone who has teenage kids, theses stats do highlight the changes in telecoms. While people were spending more time on smartphones, and using more data, operators’ ARPUs were falling because operators were being squeezed out of the content value chain. Hence the reason that content partnerships became the new normal for mobile operators about three years ago.

Go to the website of any mobile operator and you’ll very quickly see images of people watching a movie or sport on their TV or on their mobile phone. There will also be images of people running whilst smiling and looking at the smartwatch on their wrist at the same time. And there will be images of people with beards wearing headphones (which I’m assuming conveys listening to music).

Amazon Prime, Spotify Premium, Netflix, Disney +, Marvel and a range of other well-known content companies feature regularly on website of many operators. Then there will be regional content such as sports teams and national / regional cultural events that operators use, along with the global content firms, to entice customers to upgrade to the next level of bundle or have free for 6 months if they move from pre-pay to bill pay, or take out a new contract. Partnerships are important to operators. Faster networks are enabling people to consume more content on their devices. 5G is only going to accelerate that process and increase the importance of partnerships to operators. Offering services over and above connectivity is a proven tactic to get customers to upgrade their services and reduce the likelihood of churn. For the operator it means new revenue streams and for the content companies it provides a new route to market with an audience who have an established payment relationship with their mobile operator.

But just how important are partnerships to operators and are there any significant advances ahead that operators need to be planning for? It was with this in mind that Openet teamed up with Intelligence to produce the Digital Transformation section of the Annual Industry Survey, which covers the views of 520 telecoms professionals on the future of the industry.

The main focus of the survey was the importance of partnerships as operators move ahead with plans to digitise their business and roll out 5G. The main results showed that partnerships will increase in importance. By 2021 operator revenues will be more dependent on services supplied by partners. 16% feel that over 20% of an operator’s revenue will come from partner services, 36% see this figure between 10 – 20% of revenues, 38% see between 5-10% of revenues and only 10% see this contribution as less than 5% of revenues.

While the vast majority of current partnerships are consumer focused like the ones named above, what was interesting is the view that partnerships aimed at enterprises will become increasingly important. When asked “what type of partnerships will be most attractive to operators?” 44% went for content specific partnership – e.g. games, video, music. However, 33% opted for enterprise specific partnerships.  The emergence of enterprise continued with the results to the question, “where will operators reap the biggest rewards from digital transformation?” The results – 35% see consumer internet based/ OTT services as being the most lucrative sector, but coming a very close second with 34% was enterprise offers.

As operators offer more and more services over and above connectivity partnerships are only going to get more important to operators. They will look to provide creative offers that will give them an edge in the market place. As the marketing creativity and number of partnership based offers increases, then this will require operators to ensure that they can deliver new offers in days. With on average over 10% of operator revenue to come from services provided by partners in 2021, then the ability to deliver a fast time to market for new services is only going to increase in importance.

Download the Openet / paper: Digital Transformation Survey: The Importance of Partnerships


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