Every year, Innovative Systems’ Annual Rural Broadband, Video, and Social Media Report unveils data that can help elevate providers’ bottom lines, and this year is no exception. One of the revelations in the report is relatively simple to put into action: bundling internet and TV services is a great way to boost monthly average revenue per user (ARPU).
Customers Spend Less While Providers Earn More
The study reveals that customers spend $69 every month on internet alone, on average. They also spend an average of $115 every month on TV services, for a combined total of $184 every month for the two separate services. In contrast, customers who bundle their internet and TV spend $167 every month on average, for a savings of $17 every month.
If a provider is only offering internet, they will only earn that $69 every month, whereas if they offer TV service and bundle it with internet, they can earn $167, creating a significant increase in monthly ARPU. But the positive effect of bundling on ARPU goes beyond that basic math.
Customers WANT to Bundle
When the study’s respondents were asked the top reasons they would stay with their current TV provider instead of switching to a streaming-only offering from another provider, 32% said they prefer to bundle their TV and internet services.
In other words, once a provider captures a customer who has chosen to bundle internet and TV, they are more likely to retain that customer if a cheaper or more convenient streaming service from another provider is offered to them.
60% of Customers Are Already Bundling – And More Are Sure to Follow
Let’s face it: the playing field is growing. More of the bigger wireless carriers are offering more home internet. Starlink is just starting to ramp up. Even Amazon is entering the marketplace after garnering FCC approval to launch 3,000 satellites into space in order to start offering home internet services.
The more players entering the field, the more services customers are going to expect from providers. Bundling services is sure to become key in offering more value to customers to keep up with the competition.
The Less Obvious – But More Impactful – Gains of Bundling
Providing multiple services to customers will open up more cross-selling opportunities. Customers get more unified support, increasing their sense of loyalty. Providers gain more customer data to provide more robust behavioral insights, enabling them to promote more personalization, exclusive offerings, and value-added services.
The Price is Right: The Key to Successful Bundling
Right-pricing your video service is crucial to maintaining a break-even or profitable status. Proper pricing not only reflects the true value of the video content but also aligns with customer expectations and market dynamics, contributing positively to the overall profitability of the bundle, rather than becoming a financial drain.
By carefully calibrating the price, providers can achieve a balance that attracts and retains customers, supports operational costs, and maximizes profit margins, ultimately preserving the bundle’s economic viability and market position.
In short, bundling internet and TV services can boost ARPU beyond a simple increase in customer bills; it offers providers many opportunities for growth that are sure to affect their bottom lines.
For additional insights beyond the benefits of bundling, access Innovative Systems’ full 2024 Rural Broadband, Video, and Social Media Report.
You can also visit Innovative Systems’ booth 346 at the upcoming Fiber Connect 2024 conference to learn more about partnering with us to grow your broadband business in rural or local areas, as we stand committed to the mission of bridging the digital divide and providing access to all.
Scott Meyer, Director of Marketing
Innovative Systems
Scott has been involved in marketing for over 35 years, for the past 16 years as Marketing Director for Innovative Systems, where he has been helping service providers promote and sell Innovative Systems solutions to their end users.
