Lebara targets bigger footprint with new OTT services

Wednesday 24 June 2015 | 13:30 CET | Background

The same as the leading mobile network operators, MVNOs are feeling the need to diversify, differentiate themselves and offer more value-added services in order to increase their revenues. Most recently, the single-service MVNO player Lebara announced the launch of OTT voice and video services. The company appears to have the right cards in place to make it a success and attract a bigger potential customer base. The main challenges will be its ability to attract enough customers to its service before competitor Lycamobile comes up with a similar offering and providing enough unique content to cover its diverse ethnic community

Market changing

Offering just a ‘me-too’ service is not a suitable strategy in the current climate. All mobile providers, including MVNOs, have to deal with the consumer trend of substituting voice calls and SMS with over-the-top apps such as Skype and WhatsApp. In response to this and in order to counteract their loss in revenues, most MNOs have been changing their subscription structures to more data-oriented bundles, as well as adding extra value-added services. KPN’s recent move unveiling KPN Play, an app that will allow users to watch video content, is a similar strategy to Lebara Play. The main difference is that Lebara focuses on ethnic content while KPN is offering mainly national content. According to the company, ‘’Lebara Play is an unrivalled service designed for an under-served community; and the launch proves that we’re delivering on our plans to disrupt the existing entertainment landscape and diversify our communications business.” Lebara already introduced a VoIP app called Lebara Talk earlier this year, as part of its vision ‘’to be the brand of choice by 2020 in a market of more than 1 billion immigrants’’.

Lebara’s main competitor, Lycamobile appears to be also preparing a move into the OTT arena. Lycamobile’s CEO Chris Tooley hinted early this year that the company would be releasing a OTT communications app for its growing international customer base.  CEO said the app will be in the same vein as global OTT services like Whatsapp and Viber. According to him, the MVNO market is not experiencing the decline in traditional voice and messaging revenues seen across the rest of the telecoms industry, but he’s keen to insure Lycamobile against a potential decline in demand for its primary service. 

Lebara Play- key facts

Lebara’s new service offers live TV entertainment plus video-on-demand content, with access to over 3,000 movies and 150 TV channels in 13 languages. The content is available for streaming on mobile, computer and tablet, or via a set-top box on a TV set. The service can be bought with a top-up voucher from local retail outlets, payable with cash or card, or through online top-up or in-app direct from a mobile device. In addition it will offer a subscription package starting from EUR 9.99 per month; an annual contract includes two months free. The customer can also choose to buy the specially developed set-top box for EUR 149, which includes one year’s unlimited viewing. 

It targets its traditional audience of immigrants, such as people of Turkish, Indian and African descent, but also people of different ethnic backgrounds. Lebara plans to roll out the video service gradually, in all markets where it operates. The service has recently been launched in the UK as the first country, with Netherlands, Germany and France following in July. The rest of Europe will launch over the summer, and other territories worldwide will receive the service by year-end, with an expanding catalogue to include Romanian, Polish, Hindi and other content packages. 

Will it succeed

The company seems to have the right cards in place to make it a success, with Lebara’s main advantages being:
  • Large known target group to offer unique video content
  • OTT service, so no need for wholesale deal with MNO and ability to cover more countries outside its current footprint
  • The cost of the service appears appropriate and flexible enough 

Lebara’s main challenge will be marketing the service to attract enough customers and cover the initial investment cost. It also must offer enough unique content to cover all the different ethnic groups. The company mainly competes with foreign TV content offered by satellite and fixed providers. Satellite offers more free access to foreign channels compared to fixed providers, but both require higher upfront fees than an OTT service. For example KPN charges an additional monthly fee for special packages targeted at the foreign community, such as Turkish (EUR 7.50) or Hindu (EUR 15), in addition to its standard TV subscription. 

With its main MVNO service, Lebara lacks flexibility as it needs a wholesale contract with a MNO to obtain bulk access to the mobile network. Also as the company is not a full blown MVNO and lacks its own HLR platform, it cannot easily move to another MNO. This is not an issue for the OTT services, which can be delivered over any internet connection. Due a strategic decision, the company decided not to introduce the OTT VoIP service Lebara Talk in the countries where it has a MVNO agreement, but this OTT service may help it reach more clients, particularly those that use other VoIP apps in order call to foreign countries.

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