It now is conventional wisdom, and also rational thinking, that bundles create barriers to customer churn.The obvious value is that consumers save money when buying a triple-play bundle, rather than each of the products separately.
The same thinking applies to "family plans" for mobile services.
In fact, bundled products traditionally are seen as effective in many industries. Product bundling
But bundles arguably only work when consumers want the products in the bundle, or when the value-price relationship is seen to be acceptable That increasingly might not be the case for video entertainment services.
Roughly 25 percent of customers from major U.S. triple-play providers are not satisfied with their service, primarily because they don’t think it offers enough value for the money, says Yankee Group analyst Sheryl Kingstone.
And that's the key issue: video subscriptions keep getting more expensive, and consumers arguably are starting to rebel.
In western Europe, prices for mobile services arguably are high enough that if another global recession occurs, service providers could see resistance even for a "must have" product. That isn't to say people will drop mobile service. It is to note that they will likely reduce usage in ways that cuts their spending.
Mobile ARPU in Western Europe in fact declined by 9.1 percent cumulatively during 2009 and 2010, says Yankee Group analyst Declan Lonergan. During the same two-year period, ARPU declined in Greece by almost 30 percent and by over 16 percent in both Ireland and Spain.
If Europe slips into recession again in 2012, customers will change their mobile usage and spending habits, he argues. Voice and messaging revenue will suffer most, while spending on the mobile Web and apps will hold up relatively well.
The point is that bundling reduces churn when buyers seen a good fit between value and price. It doesn't take much insight to note that buyers increasingly see a mismatch in the video subscription category.
