A wireless carrier sees a customer pain point and decides to fix it.
Did you miss a T-Mobile Uncarrier event?
No, for once it's not T-Mobile making the innovative marketing moves. It's Verizon.
Verizon is channeling its inner-Denny Strigl and is seizing the opportunity. As long-time industry observers know, before there was a John Legere at T-Mobile keeping competitors guessing how he’s going to change the wireless industry, Denny Strigl, then President of Verizon and before that CEO of Verizon Wireless regularly introduced more customer friendly initiatives. He did that as market leader with everything to lose, which is much harder to do, than as a challenger with nothing to lose.
With +play, announced at its Investor Day on March 3, Verizon is striving to take the initiative and solve a pain point for customers and streaming providers alike, all while improving the stickiness of its wireless and broadband services and increasing revenue.
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The consumer pain point is the ever more fragmented streaming marketplace representing more providers and more subscriptions, all of which need to be tracked separately. For many consumers, streaming platforms can become an exploding price tag when only a fraction of subscriptions actually get used on a regular basis.
Verizon will create a website — not an app since app store gatekeepers like Apple and Google prohibit store-in-a-store concepts — that allows customers to manage all their streaming providers in one place. They can browse different streaming providers, sign up, and cancel services easily, while managing and paying their bill in one place. The pain points are obvious:
- Customers lose track of all the streaming services they have. According to the Recon Analytics Mobile Intender Survey, on average, mobile customers have 3.6 streaming subscriptions with some income brackets being as high as 4.8 subscriptions.
- Since customers often don’t know what they have, they pay for services they no longer use, and they may pay more than they originally intend to.
- Customers might have a hard time discovering niche streaming services that appeal to them.
- Most customers already come to streaming providers through third-party channels, hence another third-party channel that provides advantages is welcome rather than viewed as a complication.
- Streaming providers lose touch with customers who no longer react to email; working with Verizon provides a different communication channel.
- Verizon represents an addressable market of over 140 million customers, many of whom already choose to engage digitally. Verizon would manage the billing side and customer selection part of the relationship. +play would be separately billed from the other Verizon core services such as wireless, FiOS or other telecommunications services. We’d expect Verizon to get a percentage of the monthly recurring fees for managing the billing relationship and for signing up new customers.
Since 50% to 80% of activations of streaming platforms already occur through third parties, the risk of a channel conflict is manageable but still exists. The exit of several streaming platforms from Amazon is highlighting this risk. The advantage Verizon has here is that it is a neutral provider while Amazon has its own service that it wants to succeed. Amazon is looking to increase stickiness and a commission by offering other providers as channels on Amazon, but it is hardly a neutral player. Why else buy MGM and become the home of James Bond unless it would have bigger aspirations.
+Play has both an opportunity and Achilles’ heel at the same time. At launch +Play is designed for prospects not for existing streaming relationships since it will — at least initially — not be possible to transfer your existing credentials to +Play, but you can only activate new subscriptions.
While as we mentioned the average wireless customer has 3.6 existing streaming subscriptions, this is a damper for rapid adoption but an upside considering the noticeable churn on streaming platforms. If Verizon can take advantage of capturing the high churn and convert them to low churn customers on +Play then Verizon has more than earned its piece of the pie.
The more frictionless Verizon +Play becomes the better for customers, and Verizon, as customers love an easy onboarding and offboarding process.
At the same time, streaming providers want stickiness and reduced churn. They don’t want the customer to quickly and unceremoniously cancel the service when the one-hit series for which the customer signed up goes into hiatus until the next season. Verizon can help streaming providers by providing the ability to contact customers on their mobile device when they don’t open emails anymore. It is common knowledge and intuitively true that a decrease in usage is a predictor of churn.
The streaming partner would continue to own the user experience. This way the device experience is consistent and device agnostic in the way the streaming partner envisions it. It allows streaming partners to own much more of the customer relationship.
In this regard, Verizon differs from Comcast’s X1 platform, which gives customers the option to either keep the native streaming provider user experience or to use the X1 look and feel regardless of the underlying streaming provider.
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Verizon’s more measured approach is probably more welcome to streaming providers as it avoids becoming an anonymized content stream. In addition, Verizon has the opportunity to have a lasting relationship with a customer even after they may have discontinued one or all of the core services. It’s designed to be a profit center, and there is no incentive to send a good customer away. Even more importantly, +Play can serve as an important lasting touch point for Verizon and a means by which to reacquire a customer some time down the road.
Overall, it helps consumers that Verizon is taking up the baton to solve a customer pain point. Especially if Verizon succeeds, if not sooner, AT&T and T-Mobile will provide their own version of +Play. It just makes too much sense.
Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctor of science degree from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner and catch him on The Week with Roger podcast.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.