Leap CEO: Muve Music improves churn
Muve Music, the all-you-can-eat music downloading service offered by Leap Wireless' (NASDAQ:LEAP) Cricket Communications subsidiary, is helping the company improve its churn and is considered an important competitive differentiator for the operator.
Speaking at Goldman Sachs 21st Annual Communacopia Conference today, Leap CEO Doug Hutcheson told investors that company data indicates that the more subscribers use the Muve Music service, the longer they stay with the company. "We know that users when they have music will churn less," he said.
Reducing churn is critical to the ailing company, which in the second quarter reported churn of 4.4 percent, up from the 4.2 percent it reported in the second quarter of 2011. The company is facing serious financial issues and in August it said it will not make its $75 million minimum wholesale purchase commitment of network access from Sprint Nextel (NYSE:S). It also reported a net loss of 289,000 customers and a net loss of $41.6 million that was more than analysts expected.
Although Hutcheson did not provide specific data regarding how much Muve Music reduces churn, he did say that he believes that the Muve Music service is a key differentiator for Leap because it does not cut into the customers' tiered data plan as other mobile music services do. Cricket recently included Muve Music service with all Android rate plans for no additional cost. "We have a music service that is offered outside the rate plan because it is delivered so efficiently," Hutcheson said. "We are going to keep pushing ahead with it."
Cricket offers Muve Music across six Android devices: Huawei's Mercury, Ascend Q and Ascend II, HTC's One V, Samsung Electronics' Vitality and ZTE's Chorus. According to Cricket, a majority of customers purchasing new handsets in the last 18 months have selected smartphones or Muve Music-enabled units.
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