'Stickiness' and convenience of multimedia service bundles are in the eye of the beholder, KPMG study reveals

    Key industry strategy for subscriber growth & retention increasingly

    TORONTO, Oct. 23 /CNW/ - While the telecommunications industry is banking
on bundled multimedia service packages to increase and retain their subscriber
base, a significant number of consumers say they would readily break their
contract and switch to another provider if they were offered a better price
for one or more of the services, according to a global telecom study by KPMG
LLP, the Canadian member firm of KPMG, a global network of professional firms
providing audit, tax, and advisory services.
    The study, Consumers & Convergence II: The Search for Value, Choice and
Convenience in the Digital Age, found that the notion of bundled services
generating 'stickiness' through all-in-one convenience and unified billing is
not as strong as the industry believes. The data reveals that what consumers
think of as convenience and ease of use may differ from what their service
providers think.
    "Canadian consumers, who spend a significant part of their day on
multimedia devices, tend to be more price sensitive than loyal when it comes
to bundled services," said Kathy Cunningham, Industry Sector Leader,
Communications and Media practice, KPMG LLP. "The providers' assumption that
bundling packages that offer the triple- or quadruple-play of services will be
a strong retention factor is not as binding with consumers as a competitive
price point."
    Of the 4,400 consumers surveyed by KPMG in 16 countries in North and
South America, Asia, and Europe, 57 percent indicated attractive pricing is
the most important driver in the decision for signing a bundled service
contract. Of the 200 Canadians surveyed, 75 percent indicated that pricing was
a key factor when signing a bundled service contract. Only seven and half
percent acknowledged convenience of single billing as the most important
    Moreover, 58 percent of Canadian survey respondents indicated that even
if only one of the bundled elements they subscribe to was offered at a more
competitive price point by another carrier, they would readily break their
contract and switch to another carrier. Twenty percent of respondents
indicated that their current service package was 'sticky' and they would not
consider switching.
    The only product category where consumers showed loyalty was games. Not
only would less than half of Canadian gamers switch because of price, but 40
percent would not even alter their usage-indicating that a successful game is
thus a relatively 'sticky' product for consumers. Other categories, including
instant messaging, multimedia, blogging/networking, news access, and shopping,
do not have the same retention factor with consumers.
    The study showed consumers globally are generally unwilling to pay a
premium for additional multimedia services on their mobile phones. Over 84
percent of Canadians also said they would switch to a cheaper or free
multimedia site if their current content provider introduced or raised fees. 
This is consistent with findings in last year's study, Consumers &
Convergence: Challenges and opportunities in meeting next generation customer
    The study also showed that consumers do have preferred devices for
specific activities, but generally the mobile handset is emerging as a central
point in user experience because of its ease of use and ability to help the
consumer navigate through multiple media experiences. Mobility increasingly
means that users expect to be able to be online all the time and that their
online experience be personalized to their needs.
    Canadian consumers use their mobile handsets as a primary device for
voice calls (79 percent) and secondarily for SMS (short message servicing)
messaging (46 percent), while other on-line activities, such as instant
messaging (eight percent) and social networking/blogging/video sharing (four
percent) saw the desktop/laptop computer as the primary device. Computers and
consumer durables, such as MP3 players, are overwhelmingly the devices of
choice for multimedia applications, which include REVEALS music and video
clips, with 62 percent using their desktop or laptop computer to access
multimedia applications and 37 percent using their consumer durables, compared
with two percent using a mobile phone for these applications.
    The KPMG International study asked just under 4,400 consumers in 16
countries in North and South America, Asia, and Europe to describe their
on-line experience and the devices used to access such content or
destinations. Surveys were conducted largely online, with the exception of two
markets: China, which were conducted over the phone, and India, where most
interviews were face-to-face.

    About KPMG in Canada

    KPMG LLP, a Canadian limited liability partnership established under the
laws of Ontario, is the Canadian member firm of KPMG, a global network of
professional firms providing Audit, Tax, and Advisory services. We operate in
144 countries and have more than 104,000 professionals working in member firms
around the world.

    The independent member firms of the KPMG network are affiliated with KPMG
International, a Swiss cooperative. KPMG International provides no client

For further information:

For further information: or to schedule an interview, please call: Erin
O'Reilly, Media Profile, (416) 342-1811, erin@mediaprofile.com; Shilpa
Kotecha, Manager Media Relations, KPMG, (416) 777-8918, skotecha@kpmg.ca

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