The consumer BVAS market in 2009

Contents

1. Services revenues increase by a third
2. Overall market size estimates
3. The key broadband-related services
4. Market-size estimates for the key services
5. Methodology for estimating service market sizes

1 Services revenues increase by a third

The market for consumer broadband value-added services (BVAS) grew by 30% during 2009 in revenue terms, and by 13% in terms of subscribers. VoIP and security continue to be the most important services in revenue terms, with gaming and IPTV next.

This report, covering the market during 2009, is the sixth edition of Point Topic’s consumer BVAS report. This wealth of data enables us to analyse trends in BVAS revenues since 2003.

The run rate for consumer BVAS revenues went up by 30% during 2009, from $39.6 billion to $48.9 billion. This was a greater rate of increase than that for consumer broadband lines (14%, from 366 million to 417 million). Total broadband access revenues increased from a run rate of $113 billion at the end of 2008 to $129 billion at the end of 2009. Looked at another way, BVAS revenues contributed an extra 33.9% to standard access revenues by the end of 2009.

In terms of value, the leading services were IP Telephony, security, online gaming, IPTV and online music. IP Telephony overtook security as the service earning the most revenue during 2006. Voice over IP (VoIP) services have taken substantial market share in several countries, especially France, Japan and the USA. VoIP usually has lower tariffs than the PSTN services that it replaces, and services are typically sold as part of a bundle. Even so, the size of the market and tariffs greater than $10 per month mean that VoIP generates substantial revenue.

Point Topic splits the VoIP market into 2 segments, IP Telephony (VoIP services provided by ISPs) and Internet telephony (VoIP services like Skype that generally route through the user’s PC). Although the number of Skype accounts continues to grow, the revenue generated is relatively low (around $700 million, compared to over $14 billion for IP Telephony).

Taken together, security and IP telephony account for just over 46% of total revenues, from just 2 out of 10 services.

Average revenue per user (ARPU) has increased slightly, from $108 in 2008 to $117 in 2007 for BVAS services. This is partly explained by the fact that people are using more services on average, increasing from 2.57 to 2.72 during 2009. Broadband access tariffs for entry level consumer services have remained fairly constant during the period, fluctuation around $25.

The purpose of this paper is to estimate the penetration and revenue potential of consumer BVAS. It focuses on 10 key services, and uses leading examples to work from known information points to build a picture of the market as a whole. The methodology is explained in more detail in the last section of the paper.

Readers can use the same basic methodology to develop their own business plans, for example, by using the penetration levels and ARPU achieved by leading examples of a service as an early target for their own projects.