Digital content paid for through carrier billing will generate more than $14 billion in revenue over the next five years, according to a new Juniper Research report.
Much of the growth will come from a dramatic rise in carrier-billed payments for content that arrives on tablets, game consoles and smart TVs, according to the report, “Digital Content Business Models: OTT & Operator Strategies 2015-2019.”
The current generation of carrier billing is already showing advantages over billing through conventional payment cards. Conversion rates for app-based eCommerce merchants that offer carrier billing have run as much as 30 times the conversion rates for credit cards, largely because the transactions are even more frictionless than single-click payment systems that use stored card information.
But another key factor is that carrier billing allows unbanked consumers, who don’t have payment cards and can’t set up ACH payments, to pay through a billing channel they already have access to. That can enable first-time monetization of younger consumers, too, the report said.
Many eCommerce storefronts also found that with carrier billing, they didn’t just get more customers — they also got higher average transaction values, in part because they could bundle in-app virtual items to generate higher sales.
As a result, the percentage of merchants who let customers charge their purchases to their mobile phone bills has climbed to 35 percent from 21 percent in 2014, according to a separate report.
In the past, mobile carriers have shied away from billing for anything that wasn’t directly related to mobile telecom. But more sophisticated third-party carrier billing solutions are reducing carriers’ concerns about running afoul of regulators, and also support subscription billing that allows for steady revenue streams from content.
Juniper also reported that with Amazon, Netflix, Hulu and other over-the-top (OTT) content providers beefing up their subscription services with original video content, live events and sports programming could drive even more subscription fees — some of which could come through carrier billing.
But the cost of those live events is a potential problem, at least for now. While it’s practical for Netflix to produce new episodes of “Arrested Development” or Amazon to back new production of “Ripper Street,” those shows can earn out their costs over time through streaming, physical media and even resale to cable networks. But live sports events must pay for themselves on a one-shot basis.
And audiences may just not be big enough for that yet. “Even for free streamed sporting events, audiences are rarely in excess of a million,” Juniper Research author Dr. Windsor Holden said in a prepared statement. “To recoup the cost of a successful bid [for streaming rights], OTTs would need a paying audience of perhaps 10 million in some cases. But by 2021, when the NFL rights are due for renewal, we would be surprised if one or more OTTs did not bid for an exclusive live package.”