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Competitive Landscape Report February, 2013

Competitive Landscape Report February, 2013. Bar/Restaurant. The Competitive Landscape: CXP vs . The Most Comparable Currently Advertised. AT&T U-Verse service not available for Bar/Rest. 2-Year Cost Comparison. Comcast has a compelling TV offer for 4 outlets or less.

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Competitive Landscape Report February, 2013

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  1. Competitive Landscape Report February, 2013

  2. Bar/Restaurant Confidential and Proprietary

  3. The Competitive Landscape:CXP vs. The Most Comparable Currently Advertised AT&T U-Verse service not available for Bar/Rest

  4. 2-Year Cost Comparison Comcast has a compelling TV offer for 4 outlets or less Costs include all costs associated with a new customer contract with a package comparable to Commercial XTRA Pack (EVO 1-100) Confidential and Proprietary

  5. 2-Year Cost Comparison No longer qualifies for $109.95 offer Confidential and Proprietary

  6. Business/Private Confidential and Proprietary

  7. 2-Year Cost Comparison Confidential and Proprietary

  8. Quarter SnapshotDecember, 2012 – February, 2013 • THIS QUARTER IN REVIEW • The end of 2012 saw little change on the small business video front, however in January your competitors began to make adjustments to their product offerings. • DISH and Charter raised the standard pricing across their video offer portfolio, most likely in response to the raising programming costs viewed in 2012. • Comcast, TWC, and Comcast all stayed mostly the same from last quarter, but we did see all three weaken their offers by removing promotions that had been extended previously (Comcast, Cox) or decreasing the promotional values (TWC). • AT&T added functionality to their website that allows for customers to view U-Verse TV offers which will provide us with greater access to information moving forward. Also greater access for their customers. • At times this quarter, FiOS weakened their triple play offer by reducing the cash back promotional value from $200 to $100. • As you continue, this report will show that despite these changes, DIRECTV can still attack these offers to win and retain customers. Confidential and Proprietary

  9. February, 2013 DIRECTV Confidential and Proprietary

  10. DIRECTV DIRECTV’s Bar & Restaurant Snapshot Entry Bar/Rest Premium DTV Insights: • Customers must have a two year contract and sign-up for ABP to get best deals. *A count of the number of most requested channels as defined by DTV customers Source: DTV Sales Guide 2/6/13; Website: 2/19/13 Confidential and Proprietary

  11. DIRECTV DIRECTV’s Business & Private Snapshot Entry Bus/Pri Premium DTV Insights: • With no popular channels, Commercial Basic offers little value for both SMB customers and employees. Confidential and Proprietary Source: DTV Sales Guide 2/6/13; Website: 2/19/13

  12. February, 2013 DISH Confidential and Proprietary

  13. DISH Dish’s Bar & Restaurant Snapshot Entry Bar/Rest Bar/Rest Premium DISH Insights: • Pricing model works best for customers with specific needs. However, there is an additional $10/mo discount for customers who purchase 3+ add-on packages. • ESPN channels can be added to any package for $50/mo • Customers can receive a $50/mo discount by buying the Starter Pack, ESPN, and any 5 add-on packages. • Sports add-ons are comprehensive but expensive. Source: Provider website. 2/19/13 Confidential and Proprietary

  14. DISH Dish’s Business & Private Snapshot Entry Bus/Pri Premium DISH Insights: • Dish gets customers in the door with low sticker prices but then will try to up sell customers to more add-ons. • Customers can get exactly what they want, without a lot of extras. • The cost of additional add-ons add up quickly. • Customers can receive a $30/mo discount by buying the Starter Pack and any 6 add-ons. Confidential and Proprietary Source: Provider website. 2/19/13

  15. DISHDecember, 2012 – February, 2013 • Changes This Quarter • Dish increased the rate of their standard core package and the rates on the following video add-ons during January: Learning, Lifestyle, Latino Popular, Sports A, Variety B, Variety C, ESPN, Fox Soccer, and Fox Soccer Plus. • Of these packages ESPN ($5/mo) and the sports packages Fox Soccer and Fox Soccer Plus saw the greatest increases. The other packages increased by $2/mo • How to Compete • In February 2011, Dish CEO Joseph Clayton committed to not raising prices until January 2013. Rates have likely increased now due to higher programming costs, but with most add-ons only increasing by $2/mo, Dish’s strategy of getting customers in with a low price and then up selling them to higher priced services (i.e. more and more expensive add-on packages) • The cost of additional add-ons add up. DISH provides a great value to customers looking for just one or two add-ons. After that, customized plans can get expensive, even with discounts up to $30/month for Bus/Priand $50/month for Bar/Rest. • To match CXP in just sports programming, a DISH customer would need to spend over $300/month in add-ons! • DISH seems to follow a “bottom-up” approach by encouraging customers to buy only as much add-ons as needed. Their marketing is aimed at the small customers not at the number of channels and sports they offer. • However, for customers looking for 3 or more add-ons, in most cases DIRECTV has an offer that has more channels at a better price. In fact, the promotional rates of all of DIRECTV’s Bus/Pri offers (except Choice) are lower than the customized Dish package. Confidential and Proprietary

  16. February, 2013 Comcast Confidential and Proprietary

  17. COMCAST Comcast’s Bar & Restaurant Snapshot Entry Bar/Rest Premium Comcast Insights: • Pricing is by flat rate, not by seating occupancy, EVO, or FCO. Comcast really starts to tip the balance in their favor on seating occupancies 200+. • Sports and Entertainment Deluxe is Comcast’s ultimate package for large Bar/Rest however promotional pricing is only available to customers with up to 4 outlets. Source: Provider website. 2/19/13 Confidential and Proprietary

  18. COMCAST Comcast’s Business & Private Snapshot Entry Bus/Pri Premium Comcast Insights: • Comcast’s Information and Entertainment package provides little value with only 5 Popular channels and a $44.95 price point; compare to Business/Office Information that has twice the popular channels. • Comcast incentivizes customers to accept two and three year contracts by providing discounts on installation. Confidential and Proprietary Source: Provider website. 2/19/13

  19. COMCAST December, 2012 – February, 2013 • Changes This Quarter • Comcast has continued to extend their Sports & Entertainment Deluxe for $109.95/mo with 2-year agreement (standard $189.95) promotion to the end of the respective month. • Comcast has removed their promotion offering $10/mo off when ordered online. • How to Compete • By removing their $10/off promotion, the only discount Comcast offers for Bar/Rest is on their most expensive package: $109.95/mo for Sports & Entertainment Deluxe. • Comcast’s offer of Sports & Entertainment Deluxe for $109.95/mo is a great deal that beats the standard price of DIRECTV’s Commercial Xtra Pack. • Only available to customers with up to 4 outlets, limiting its effectiveness (Bar/Rest) • By practically giving away its Basic TV service (just $4.95/mo) when bundled, Comcast hopes that they can convince customers to upgrade to a more expensive service after the 3 month promotional period. • DIRECTV’s 12-month promotions provide a better deal than Comcast’s 3-month discounts across the board over a one year period. • Comcast’s Digital Standard and Digital Deluxe weakness is their sports programming as CXP and Commercial Choice Plus both offer more ESPN and RSN channels. Customers can upgrade sports offerings for $34.95/mo (a 41% and 32% price increase respectively), but at that rate DIRECTV’s CXP is a better value. (Bar/Rest) Confidential and Proprietary

  20. February, 2013 Cox communications • Unlike most companies in the SMB commercial space that generally keep their pricing and plans consistent across their footprint, Cox operates on a regional structure. Across these regions Cox may offer different plans, pricing, and/or promotions. • In the following tables for Cox, the median price across all markets is used, except in cases where a specific market’s price/promotion is called out, and all channel counts are shown as a range across all markets. Confidential and Proprietary

  21. COX Cox’s Bar & Restaurant Snapshot Entry Bar/Rest Premium Cox Insights: • Advanced TV is the only offer customers can purchase add-on services such as a movie, variety, or sports add-ons. • Free HD programming across all markets and offers compared to 3 months Free HD with DTV. Confidential and Proprietary Source: Provider website. 2/19/13

  22. COX Cox’s Business & Private Snapshot Entry Bus/Pri Premium Cox Insights: • High channel counts at relatively low prices. • Starter is an even worse value than Commercial Basic outside of PHX • No offer to compete with Business/Office Information. Source: Provider website. 2/19/13 Confidential and Proprietary

  23. COX COMMUNICATIONS December, 2012 – February, 2013 • Changes This Quarter • On 01/01/2013 Cox’s latest promotions expired. As a result the following promotions were either added or extended: • Cleveland (Added) – TV Select is available for $40/mo for 24 months w/ 2 year agreement (standard price is $55.95) • D.C. (Extended) – Receive 50% off installation when TV Select is ordered online with a two year agreement or free installation with a three year agreement. • Phoenix (Extended) – TV Starter is available for $10/mo for 12 months plus free installation when added to Cox Internet and voice (standard price is $25.95/mo). Requires a minimum 1-year contract. • D.C. (Extended) – TV Select is available for $39.99/mo plus get one month free with a 2-year contract (standard price is $63.29). • The above promotions all show an expiration date of 04/01/2013 • D.C. – Cox previously included their Sports & Info Pak ($5.25/mo) with Advanced TV, this has now been removed. • How to Compete • For the first time since year, Cox is not offering an Advanced TV promotion in at least one of their markets. With the promotion Cox was a clear price leader for that offer level but that advantage is now gone. • Cox is showing new interest in their TV Select Plan. At the $40/mo promotional price TV Select is an attractive offer especially for Bus/Pri. DTV’s advantage is in the customers ability to configure their plan through add-ons, Cox only allows this type of configuration with their Advanced TV offer. • Cox’s biggest weakness is their below average ESPN, RSN, and alternative sports programming (Speed, Outdoor Channel, league specific channels, etc…) included in their offers. • Cox includes free HD access on all their plans, and there is currently no difference between their private and public offers. Confidential and Proprietary

  24. February, 2013 Time Warner cable • Unlike most companies in the SMB commercial space that generally keep their pricing and plans consistent across their footprint, TWC operates on a regional structure. Across these regions TWC may offer different plans, pricing, and/or promotions. • In the following tables for TWC, the median price across all markets is used, except in cases where a specific market’s price/promotion is called out, and all channel counts are shown as a range across all markets. Confidential and Proprietary

  25. TWC TWC’s Bar & Restaurant Snapshot TWC Insights: • TWC attracts customers by including 8 ESPN channels and with a reasonable price. • Low overall channel count based on price • 10% and 20% discounts for customers who select 2 or 3-year contracts respectively. Source: Provider website. 2/19/13 Confidential and Proprietary

  26. TWC TWC’s Business & Private Snapshot Entry Bus/Pri Premium TWC Insights: • TWC has segmented its offers to cater towards specific customers. • At least one ESPN channel is included with every package. • 10% and 20% discounts for customers who select 2 or 3-year contracts respectively. Source: Provider website. 2/19/13 Confidential and Proprietary

  27. TIME WARNER CABLE December, 2012 – February, 2013 • Changes This Quarter • TWC increased the promotional rate on their running triple and double play promotions: • Triple Play Promotion (was $99.99): • NY: 7 Mbps Internet, Unlimited Tri-state calling, and Digital News Tier TV for $109.98/mo with 1-yr contract. • Double Play Promotion (was $99.95 for both services): • Cleveland, Dallas, and LA: 10 Mbps Internet for $99.95/mo + Business Class phone for $29.95/mo when bundled with 3-yr contract. • NY (Added Since Last Quarter): $39.99 per service per month for 7 Mbps Internet + Unlimited phone with 1-yr contract. • How to Compete • With TWC focused on voice and Internet, DIRECTV customers have the opportunity to combine DTV service with TWC double plays for a comparable price and more channels than a traditional TWC triple play (see chart). • For businesses with multiple TVs, DIRECTV’s price advantage on outlet fees adds up to big savings for the customer (a savings of $8/outlet/month). E.g. a business with three TVs would be saving ~ $288/year just on outlet fees by switching to DTV. • TWC Bars and Restaurants TV offers a very compelling option to bars and restaurants not looking for sports add-ons like NFL Sunday Ticket. However, CXP’s promotional price is still less expensive over the first year. CXP also offers more RSNs and “popular” channels. Confidential and Proprietary

  28. February, 2013 Charter communications Confidential and Proprietary

  29. CHARTER Charter’s Bar & Restaurant Snapshot Entry Bar/Rest Premium Charter Insights: • Charter’s offers a 10% discount to customers who bundle. • Charter offers a limited sports selection (2 ESPNs, local RSNs) however, sports programming can be increased with Sports View add-on (3 ESPNs). • Sports View add-on is available for $89/mo. Source: Provider website 2/19/13 Confidential and Proprietary

  30. CHARTER Charter’s Business & Private Snapshot Entry Bus/Pri Premium Charter Insights: • Expanded TV offers a large number of “popular” channels at a low monthly charge; however Basic TV offers little value despite relatively high channel counts. • Charter is strongly focused on their phone & Internet double play and offer discounts to customers who bundle with TV. • Sports View add-on is available for $89/mo. Confidential and Proprietary Source: Provider website. 2/19/13

  31. CHARTER December, 2012 – February, 2013 • Changes This Quarter • Charter has simplified their online shopping cart and have removed the option to select between basic and expanded TV, however both options are confirmed to still be available. • Mystery shopping has revealed that Charter has increased all offer pricing by $2/mo as follows: • Private – Basic TV: $36.99/mo from $34.99/mo • Private – Expanded TV: $59.99/mo from $57.99/mo • Public – Basic TV: $44/mo from $42/mo • Public – Expanded TV: $78/mo from $80/mo • How to Compete • Charter’s price increase on its TV packages is most likely due to rising programming costs. With this increase, the one year cost of CXP ($846.93) is now lower than Expanded TV ($866.40) while offering a lot more value. In addition, Business Choice has more “popular” channels for still about the same price (Bus/Pri). • Basic TV offers nearly no value; Business Information offers more for about the same price and Commercial Basic offers the same for nearly $30 less per month • DIRECTV has a clear advantage on equipment fees. Consider a customer that needs 4 HD receivers. Over the first year, with DIRECTV that customer would pay $198; with Charter, that customer would pay $778.20 just on receivers! • Charter still discounts Internet when purchased with just voice (so it can still be taken advantage of if a customer bundles Charter voice and Internet with DTV video). Confidential and Proprietary

  32. February, 2013 Verizon fiOs Confidential and Proprietary

  33. FiOS Verizon FiOS’s Bar & Restaurant Snapshot Entry Bar/Rest Premium FiOS Insights: • Offers EVO pricing for Bars and Restaurants. • Customers who do not bundle and/or request a no contract option are faced with high activation and installation fees. • Extreme HD has high channel counts and market leading ESPN options. Source: Provider website. 2/19/13 Confidential and Proprietary

  34. FiOS Verizon FiOS’s Business & Private Snapshot Entry Bus/Pri Premium FiOS Insights: • FiOS is currently marketing their Internet and Phone double play with a $200 Visa prepaid card. • FiOS has high set-up costs when ordered without a contract; their equipment fees are slightly higher overall than DIRECTV’s. Source: Provider website. 2/19/13 Confidential and Proprietary

  35. VERIZON FiOSDecember, 2012 – February, 2013 • Changes This Quarter • Verizon FiOS weakened their triple play offer during last quarter by reducing the cash back promotional value from $200 to $100. Recently, FiOS increased the cash back amount back to $200, this deal expires on 3/16/2013. • How to Compete • DTV customers who add CXP to FiOS’s “Solutions Business” Internet and phone bundle come out on top compared to a VZ FiOS triple play with Extreme HD • When not bundling, FiOS customers will have to pay high installation and activation fees. • VZ charges slightly more for additional outlets and additional HD receivers. For large establishments, these costs can add up fast. • For Verizon all additional outlets, public or private, cost $19.99/mo. Confidential and Proprietary

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