Optimisation of Digital TV offering through Menu Based Conjoint

SKIM conference, 28 Oct 2011

John Irwin (TalkTalk) / Nicole Huyghe (solutions-2)

SET TOP BOX PRICE

MONTHLYFEE

INSTALLATION CHARGE

CONTRACTLENGTH

TalkTalk TalkTalk Plusnet BT Sky Virgin

ProductEssentials Plus

Unlimited broadband and calls + Friends &

Family MobileUnlimited Anytime

L BB + XL Phone + Talk Mobile Extra Anytime

Speed Up to 24MB Up to 24 Mb Up to 20 Mb Up to 20 Mb Up to 20 Mb Up to 10 Mb

Inclusive calls 0870/0845 Free cals

to IT customers

0870/0845 7p fiat rate on calls to

Mobiles

0870/0845 25% discount on calls to

mobiles0870/0845

0870 25% discount on calls

to mobiles

0870 Inclusive calls to Virgin

mobiles

Monthly £22.30 £28.30 £35.47 £51.40 £40.25 £41.00

Connection fee FREE FREE £0.00 £0.00 £0.00 £667.50

18 month total £372.15 £465.90 £643.45 £901.20 %688.50

18 month savngs with TalkTalk

£177.55 £435.30 £222.60 £201.60

HomeSafe network security

Generous download allowance

Will never restrict your speed

Unrestricted streaming

Free calls to 3.5+ landlines

Calling Circle

UK’s best value mobile calls

Intern. calls add-on

Speed Dial

Fibre Available

Other information- - Free security for 3

months - 12 months free security opt-out -

Originally just Essentials Expanded to include Plus & competitors ‘Inclusive’ content

Genre vs Size

Pricing: Scenarios to test

£ Y2£X1 £ Y1 £ Z1 £ X2 £ Z2 £ X3 £ Y3 £ Z3

Business questions

Optimum core YouView package?

Impact of bundling inclusive content in core

package?

Bundling by size or genre?

Take-up of bundles?

Price sensitivity of bundles?

STEP A

STEP B

Core tv packages

Channel composition/take-up

The research flow

2 TV package offers

Channels in core package

Channel bundle: size/genre

Bundle interest

Price sensitivity of bundles

WHICH APPROACH?

Routes of choice

TRADITIONAL CBC2 core packages

Inclusive channels?

Channel bundles

Different price levels

ADAPTIVE CBCIf no interest in

music?

LOW COST set top boxhigher monthly fee

£X1

Higher Cost set top boxLOW monthly fee

£ Y3

MENU BASED

CONJOINT

RESEARCH PROCESS

CORE OFFERING

STATED PREFERENC

E

MENU BASED

CONJOINT

2 core TV offerings

Inclusive content

Familiarising

Bundle concept and composition

Sample with size bundles

Sample with genre bundles

Core offering via basic questions

choice between 2 core TV offerings

preference of free channels

CORE OFFERIN

G

Set top box - £X1

Essentials package - £X2 per monthInstallation charge - £X3

Contract length - Y months

Set top box - £X4

Essentials package - £X5 per monthInstallation charge - £X6

Contract length - Y months

I would not take either of these packages

Based on the video you have just seen and the description you have just read, which, if either, of the folling packages are you most likely to take if TalkTalk offered YouView as part of a home phone, broadband & TV service?

Set top box - £X1 Essentials package - £X2 per monthInclusive content – AInstallation charge - £X3

Contract length - Y months

I would no longer be interested in this package

Assume that the package just selected was offered with [Inclusive content] A (at no extra cost), would you still be interested in this pack?All details of the pack are outlined below.

Familiarisation exercise

Stated preference of channel bundlesSTATED

PREFERENCE

STEP 1: CORE OFFERING

STATED PREFERENCE

Please read the description below for the Entertainment pack carefully.Focusing ojust on the channels that are included in this pack & ignoring the cost for now, please indicate how interested you are in subscribing to this channel pack.Please use a scale of 1 to 5, where 5 means that you are extremely interested in subscribing to this channel pack and 1 means that you are not at all interested in subscribing to it.

Please read the discription below for the Kids pack carefully. Focussing just on the channels that are included in this pack & ignoring the cost for now, please indicate how interested you are in subscribing to this channel pakc.Please use a scale of 1 to 5 , where 5 means that you are extremely interested in subscribing to this channel pack and 1 means that you are not at all interested in subscribing to it.

10 tasks4/5 channel bundles5 price points per bundleSplit sample(size vs. genre)n=500 per sample

MENU BASED

CONJOINT

On the next ten screens, you will see all of the additional channel packs together with the TalkTalk home phone, broadband & TV packages you have indicated you are moest interested in. The monthly price for each channel pack wll vary from screen to screen and we would like you to indicate whether or not you would subscribe to each channel pack at the price you see.

If you are not interested in any of the channel packs at anly of the given prices, please tick ‘None of the above’.

Below you will see the TalkTalk home broadband & TV package you have indicated you are most interested in together with all of the additional channel packs at different monthly prices. For each channel pack, please indicate whether or not you would subscribe to that channel pack at that monthly price.

If you are not interested in any of the channel packs at anly of the given prices, please tick ‘None of the above’.

Set top box - £X1 Essential packages - £X2 per monthInclusive content – AInstallation charge - £X3

Contract lenght - Y months

Entertainment pack £X1 per month

Hollywood TV pakc £Y2 per month

Knowledge pack £Z3 per month

Kids pack £V4 per month

Music pack £W4 per month

None of the above

TOTAL MONTHLY PRICE £Z

MBC ANALYSIS

ANALYSIS APPROACHES

VOLUMETRIC

ALLOCATION

SERIAL CROSS-

EFFECTS

EXHAUSTIVE

ALTERNATIVES

Predicts “volume” rather than choice

Total volume = number of items shown + none

Results in a % likelihood to buy

Focus on marginal effects

Felt counter-intuitive (total %likelihood >100%)

VOLUMETRIC

ALLOCATION

One model for each channel pack

Models marginal effects <-> combinations

SERIAL CROSS

EFFECTS

Models all possible combinations of channel packse.g. with 4 channel packs : 24 = 16

combinationse.g. with 5 channel packs : 25 = 32

combinations

Effect of each combination + marginal effects

One model

More realistic approach of decision-making

Estimation time still ok

EXHAUSTIVE

ALTERNATIVES

Utilities for the desirability of each combination: similar pattern as the count

analysis

Prices – count analysis:All channel packs were quite price sensitive

BUT:Utilities of the price levels showed less

differentiation and constraints were needed

Exhaustive alternatives: results

EXHAUSTIVE

ALTERNATIVES

RESULTS & ASSESMENT

EXHAUSTIVE ALTERNATIVES

Logical interview process & answers!

Simple programmming exercise

Analysis : intensive exerciseWhich model to use?CSV fileDummy variablesCovariance matrixMatching utilities with counts results

EXHAUSTIVE ALTERNATIVES

Actionable findings

Low cost set top box & higher monthly fee vs. higher cost set top box & low monthly fee

Impact off inclusive content on set top box choice

‘Buy through’ by:

• Content model• Pay TV vs Freeview households• Set top box choice

Questions?

John Irwin john.irwin@talktalkplc.comNicole Huyghe nicole@solutions2.be