Verizon announced that it would no longer offer home television and internet on bundled, contracted plans, instead opting to give consumers greater flexibility through what it calls Mix & Match.
Business Insider Intelligence
With Mix & Match, Verizon customers can choose between three internet tiers ranging from $40 to $80 per month, and from cable packages offered either through Verizon’s in-house Fios service or through the company’s partnership with YouTube TV.
Consumers can change their service selection each month, whereas Verizon had previously offered one- and two-year contracts for discounted introductory bundles. This practice sowed frustration among consumers, as many wanted internet alone but were forced to also buy home television, or because the service price escalated after the introductory contract expired, Verizon SVP Frank Boulben told The Wall Street Journal.
Mix & Match builds on Verizon’s strategy to adapt to changing consumer habits. Verizon reported a net loss in Fios TV subscribers for every quarter since 2016, according to Barrons. This coincided with the rise of subscription-based internet streaming services such as Netflix, Amazon Prime Video, and Apple TV+, which are often cheaper than traditional cable bundles.
Many consumers, particularly younger ones, have opted for internet-based streaming services over cable. Home internet and media providers such as Verizon have been aware of this trend for some time, but bundling helped staunch cable subscriber losses, even if it steered many customers to plans that didn’t directly match their needs. In the meantime, Verizon worked to improve its subscription offerings, forging partnerships with Disney+ and YouTube TV and improving content distribution for Fios TV.
As mobile operators increasingly bundle media subscriptions with connectivity services, they should heed lessons from the failures of home bundling offerings. Bundling is a tool that inherently fosters slower, unresponsive innovation: The practice incentivizes consumers to buy two things together that they might not otherwise buy apart.
This creates an opening for superior standalone products — Netflix, in the case of pay-TV — to eventually disrupt industries that were once insulated from competition. AT&T is emblematic of the limitations of bundling in a sufficiently competitive environment: The company has invested over $100 billion to purchase DirecTV and Time Warner to build up its media assets, but it hasn’t been able to leverage those combined assets via bundles in a way that drives consumer interest and subscriptions.
As Verizon runs into similar problems in the home, it’s increasing the modularity of its product options and also expanding into segments like VR and cloud gaming. How Verizon fares with this new approach in its home business will be an instructive lesson for the wireless industry as a whole — particularly as mobile operators continue to pursue bundling as a strategy outside the home as well, pairing mobile offerings with media to draw in and retain mobile subscribers.
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