>90% of AOL's ~$150mm annual revenue comes from their dialup customers.
They're not really getting new customers, but their average customer lifetime is 14 years. It's basically elderly people who have had autopay set up for ages.
They're not really getting new customers, but their average customer lifetime is 14 years. It's basically elderly people who have had autopay set up for ages.
Over the past few years as my parents approached fixed income (with little savings, they didn't save/invest anything until several years ago), I've been steering them towards habits that offer savings, without sacrifice (i.e. going to a different supermarket, changing telco providers, etc.). Keeping the same things, just lowering the bill. However, my mother is the one who is "in charge" of these things. A campaign to simply change a service provider takes about a year. Even if everything is provided for them. The amount of resistance encountered for her to spend 20 minutes to do something is huge.
After the change, she'll agree it was a great change and even advocate to others that they should do it too. She'll never admit she should've done it when first suggested and empirically shown it would offer no degradation but save money. Yet that friction is very real.
Age isn't a factor either. I know people in their late 20s and mid-30s who do exactly the same thing. People don't like change, and the friction of having to do anything is enough to result in people doing nothing.
What's fascinating is that Verizon purchased AOL for $4.4B this year. With AOL's publishing business only raking in ~$10mm per year, I'm really curious how they valued the dialup business. Did they just straightline membership attrition percentage and assume it'll decrease steadily? Or did they do an in-depth analysis of members ages and life expectancy and assumed lifetime membership to calculate a more granular remaining CLV? Now that's a morbid thought...
Beyond that I think Verizon bought AOL 1) for a company with some experience with digital advertising, which is where I think Verizon sees a lot of its growth potential. There's only so many mobile phone subscribers in the US and landline business isn't really growing too much. See its accquistion of the TV company from Intel (they spent $1 billion for a NFL contract to stream games on mobile for 4 years). 2) it's still profitable and $4 billion really isn't very much for Verizon (Verizon itself was the $130B buyout of the Vodafone share by Verizon communications)
It's actually Adjusted OIBDA that's $10mm for the Brands group, which is arguably a more accurate figure to reflect the value of the division. Check out the table on page two of the 2015 earnings report at your link for the full breakdown.