PRS Annual Market Review 2014
07 July 2015, Jo Prowse, Acting Chief Executive
Today we published the 2014 Annual Market Review (downloadable PDF) which we asked MobileSquared to conduct for us. It’s thought-provoking and I recommend it to anyone interested in an independent view of the state of the PRS market.
The report depicts an evolving industry. On the one hand, traditional PRS are facing a challenging environment as the market declined by 3.2% in 2014 to £686 million (ex VAT). Consumers are increasingly accessing content elsewhere, often for free, but also when they need it. Voice services, in particular, have had a tough year. The market is expected to continue to decline in 2015 - 14 of the 18 service categories that make up the PRS market are forecast to shrink in size this calendar year.
But as smartphone ownership grows and consumer behaviour changes, so there are real opportunities for the PRS industry. The Annual Market Review identified what it calls the new 3Gs – namely giving, gaming and gambling – as promising PRS sectors. Charity donations by text, in particular, grew spectacularly in 2014 and are now the second largest market segment. The gaming, including apps and social networking games, and gambling sectors also had successful years. The ‘new 3Gs’ now make up 40% of the market.
At PhonepayPlus, our aim is that anybody can use PRS with confidence in a healthy, innovative market. We have supported innovation in the market by trialling and then making permanent SKIP donations for charities. We are also continually looking to ensure our regulation supports new business models entering the market, while ensuring consistent outcomes for consumers. That’s why we launched an app store pilot in May 2014, which we made permanent 12 months later.
One aspect of the research that we thought was especially noteworthy was the effect of perceived non-compliance. MobileSquared estimated that more than 100,000 consumers left PRS per month in 2014 because of what they thought was a non-compliant service. It probably doesn’t matter to the consumer whether that service was in fact actually compliant with the letter of the Code – what the review is saying is their perception of problems with a service or that they might have been ripped off is enough to put them off using PRS altogether. It underlines that consumer trust is absolutely central to a healthy, innovative market.
There’s far more insight in this piece of research that we hope is of value to anyone with interest in the PRS industry. We look forward to engaging with stakeholders in interpreting the results of the research and assessing what we can do collectively in response.