Direct carrier billing (DCB) is rapidly coming of age and is now increasingly being deployed around the globe by major media players to capitalise on their mobile audiences’ need for instant gratification. Paul Skeldon takes a look at the latest research
The proportion of worldwide digital content paid for via carrier billing is expected to nearly double over the next five years, according to a new study from Juniper Research.
The study, Direct Carrier Billing: Forecasts, Player Strategies & Emerging Opportunities 2019-2024, found that with most leading app stores and content providers now seeking to enable carrier billing as an option, consumer spend via the mechanism is expected to rise from $28 billion last year to nearly $90 billion by 2024.
It claimed that carrier billing deployments would benefit both operators and content publishers; allowing the former to generate a revenue stream from content while enabling the latter to gain subscribers by using carrier marketing channels.
The research argued that the option was likely to be particularly popular in regions such as Latin America and the Indian Subcontinent, where it will probably be a major facilitator of end user content spend. However, even in markets such as the US where card payments currently predominate, Juniper claimed that the convenience and growing availability of carrier billing would see it increasingly used for content subscriptions as well as impulse purchases. It stated that as a result, US carrier billed spend would more than double to $8.6 billion by 2024.
Local solutions needed to reduce friction
Furthermore, the research cautions that for industry stakeholders to maximise the scale of their opportunities, they needed to ensure that measures were in place to reduce the risk of fraud.
According to research author Dr Windsor Holden:“Customers, whose personal data is compromised by techniques such as clickjacking or iframe masking, will understandably be extremely reluctant to browse and buy content in the future.”
The research argued that techniques such as iframe blockers and intelligent fraud risk assessment tools, allied to the anonymisation of payment details, were critical to maintaining consumer confidence and sustaining growth.
Juniper Research is acknowledged as the leading analyst house in the digital commerce and fintech sector; delivering pioneering research into payments, banking and financial services for over a decade.
Netflix and OTT lead the charge
Where DCB is being used, uptake of its functionality is being fuelled by bundled content such as Spotify (across Europe) and Netflix (in markets including the Philippines and Mexico).
By using carrier billing for acquisition, OTT content providers have reduced their marketing expenses, leveraging the brand name of local mobile operators, says the Juniper research.
Leading OTT players such as Netflix are understandably keen to explore the opportunities to spread their varied content to consumers worldwide. However, they have been heavily reliant on card payments to monetise consumers, which has proved problematic when wanting to launch in emerging markets with low credit/debit card penetration.
By entering into a partnership with a network operator and carrier billing provider, OTT content providers can reduce marketing costs by leveraging the strength of the brand names of local mobile operators. In this business model, the OTT provider is able to reach the user base of the telecom operator and target its offerings to these subscribers, while simultaneously monetising its content through carrier billing.
In emerging markets, such as India, OTTs have found that this approach has helped gain them presence in the market.
These deals are by no means limited to developing markets. Operators in developed markets may also view content subscriptions as a means of increasing market share and/or reducing churn rates, as well as increasing end user spend.
Indeed, one of the first major OTTs to adopt this strategy – Spotify – partnered with a number of European operators, including Telia and KPN, with the operators consequently experiencing an uplift in spend. Spotify, in turn, has had a 20% uplift in customer conversions from free trials to paid for subscriptions when it added a mobile phone billing option.
Netflix has embraced this approach over the past 2 years, initially partering with operators in the Philippines before expanding elsewhere. Typically, the streaming service initially offers a period whereby customers receive the content for free; depending on the operator deal in question, this can be up to 12 months in some cases. At the end of the period, those who wished to continue accessing the content would be billed via carrier billing.