Yankee: Triple Play a $143 billion opportunity

Cable and telephone companies are chasing about up to $145.3 billion in service revenue as they try to attract new triple play customers over the next three years, according to new research from the Yankee Group. The competitors who succeed in selling a triple play bundle during this time period stand to reap significant financial rewards, according to the study,
“Defining the Opportunity Market: A Study of the Annual Revenue Opportunity for Residential Broadband Service Providers.”

“Over the next three years, we are going to cut down on the number of households up for grabs,,” said Aditya Kishore, study author and director of The Yankee Group Media & Entertainment Strategies. “The average spending for households will actually grow, but with the sale of triple play, there will be less avoidable churn. So there will be fewer households in play but the value of each of those is going to go up. In poker terms, there are fewer hands with higher stakes.”

The study found there will be between 32 million and 35 million new triple play customers a year, for the next three years, as consumers either change service providers, add new services or create new households. Those subscriptions will generate between $3,854 and $4,481 in revenue over their lifetime, the Yankee Group said, to create a revenue opportunity of between $137.5 billion in 2006 to $145.3 by 2009.

“I think cable is in a better position today to take advantage of the bundle,” Kishore said. “The telcos do have their satellite partnerships. But I don’t think they are having quite the same impact as the cable bundle. AT&T just announced their HomeZone service that tightly links the satellite product and that is indicate of their need to get the bundled product out and sooner is better than later.”

On an annual basis, churn comes from three areas, he said, including new households, households that move and “avoidable churn,” or consumers that either aren’t happy with their current service or are attracted to a new offer.

“The key metric is how often do these decisions come about?” Kishore said. “It varies by product. If you look at households with one service, there is one churn rate, with double plays, households churn less, and with triple play, even less. So there will be fewer households that are churning.”

After this period of intense sales competition, there will be greater focus on courting “movers,” by developing sales channels through home builders and other organizations that focus on helping people move, he added.

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