Over the past decade, US digital companies like Facebook and Netflix have been held up as the ‘darlings’ of contextual marketing. And it’s no wonder why. These companies understand that to keep their audiences, they must offer something that users find worthy of their time and money. To do this they take a data-first approach: continuously delivering personalized digital experiences and services based on user behaviors and patterns. And consumers have, largely, been happy with this approach – until recently.
According to our latest research, the recent Facebook/Cambridge Analytica data scandal has diminished US consumer trust in OTTs and their use of personal data. We’ve calculated that in the wake of the scandal, over 15.3 million social media users deleted accounts in protest and 63% would prefer to pay for digital services if it means they had better control over their data.
So, with US consumer trust of OTTs waning, how can operators champion their own trustworthiness to overtake OTTs and launch new services?
Fool me once…
Operators have long aspired to become like the Facebook and Netflix of this world. Indeed, they have almost been frozen with envy at the OTTs’ success. But the tide of success is changing as consumers become increasingly more concerned with how their data is stored and shared, and with whom.
For operators, this is good news. Despite chronically low NPS, operators have an unrivalled relationship with their customers. Not only do they have ample knowledge of who their customer is, what they do with their device, and even what TV shows they’re currently addicted to, but they also benefit from rarely faltering when it comes to data protection. This makes the operator a trustworthy entity. Unlike with OTTs, consumers are comfortable sharing personal and sensitive data with operators, and the reality is, they have little option but to do so. Operators are consumers’ only option to accessing mobile services. Sure, you can go to an MVNO, but ultimately, there’s still an operator sitting behind the MVNO brand.
The use of OTTs on the other hand, is a choice. Consumers choose to have Facebook or Netflix accounts or use Amazon services, but other alternatives exist, of which some are operator-led. Operators are therefore in an advantageous place to claw back some of the revenue lost out to OTTs by offering more and new digital services that competitively rival that of the untrustworthy OTT. With more than half (53%) of US consumers admitting to trusting their mobile operator more than digital service companies, it looks like the whirlwind success enjoyed by OTTs may be in a consumer trust-shaped downward spiral.
A change is gonna come
Operators now find themselves in a unique position – the floor is theirs, so to speak. But this changing tide favoring operators does not imply that OTTs will completely disappear – in fact, OTTs are still very much needed by the mobile operators. Partnerships between mobile operators and content providers will continue to flourish so long as the latter drive customer engagement for the former. Ultimately, content providers give operators something “more” to sell, beyond basic connectivity services.
But mobile operators can’t simply magic these new services and offers out of thin air. If they are to harness the opportunities that present themselves before them, they must first recognize the critical need to change existing business support systems (BSS). To do so, providers should first look at changing commercial and delivery models.
Traditional commercial models desperately need a rethink – they have become too inflexible, too expensive and are largely unable to meet the new demands of both mobile operators and their subscribers. Today’s consumers want everything on-demand. The growth of the OTTs points to this: why pay for a monthly subscription from a TV provider, where you have no choice regarding which programs you can watch and when, when you could pay far less for a Netflix subscription where everything is on-demand, anytime, anywhere? To meet these demands, operators need new commercial models that can respond quickly to short-term goals and initiatives. These new commercial models should remove the reliance on never-ending service contracts that look at transformation projects in terms of years, rather than months, or even weeks.
Delivery models will also need to change. This should see operators adopt the same level of flexibility as possessed by their competition. Operators can do this by harnessing new processes and IT trends such as DevOps and microservices. This will boost their flexibility and ability to identify consumer trends in real-time, and respond accordingly by rolling out new services in days and weeks.
A change in delivery and commercial models is only the tip of the iceberg, however. Operators must also move towards platform-based systems to emulate OTTs and adopt a “digital first, customer first” approach. Doing this will drive the transition from a hardware and software stack environment, to a world of real-time, automated digital platforms. These platforms allow operators to launch new services in as little as 14 weeks while still allowing for long-term transformation projects to continue. By harnessing a modular, API-driven approach, operators will boost their service delivery and begin to match the agility of large wesbcale companies.
Make hay while the sun shines
Operators have traditionally been hesitant to change the way they operate, but change they must if they are to capitalize on new opportunities and create much-needed new revenue streams. With waning consumer trust towards OTTs, and a growing demand for more transparency – 83% of our respondents agreed that companies need to be more transparent with their practices around data use – there has never been a better time for operators to consider new approaches to traditional business, commercial and delivery models.
Operators have earned the trust of their customers. Now the onus is on them to use this data in a secure and transparent way to deliver new services to their subscribers. As the saying goes, it’s time to make hay while the sun shines.