5 MAR 2020

Hard bundles & soft bundles: differences from a streaming service’s perspective

POSTED UNDER Bundling Mobile Marketing Streaming Subscriptions White Paper
image of Mattias Liivak

Mattias Liivak

Head of Marketing & PR, Fortumo

image for Hard bundles & soft bundles: differences from a streaming service’s perspective

Product bundling means offering several products for sale as one combined product or service package. For streaming companies, bundles are most frequently created with telcos (mobile operators, TV and internet service providers).

Omdia estimates that there are more than 540 digital content bundles launched across the world by video streaming services. Bundling by music streaming services is almost as popular, and with the emergence of cloud gaming, gaming content is starting to get bundled as well.

Such bundles are beneficial for both sides. Streaming companies have the content and need new users to sign up. Telcos have the marketing channels to reach local consumers and need to differentiate their offerings from competitors to sell their core products: cell phone plans, TV or internet services.

Bundles come at a price for both parties. Telcos invest into marketing of the combined offering, which means streaming companies need to give users discounts or extended trials to their service. Otherwise, users would have no motivation to take up the offer through the telco bundle.

As a result, the standard bundle launched together by streaming companies and telcos looks something like this (example of EIR Ireland and Amazon Prime Video):


This is the standard hard bundle model. Telco subscribers get a free trial to the streaming service for an extended duration (most frequently 3, 6 or 12 months) but only as long as they are also subscribed to a specific telco service plan. When the extended trial ends, they are converted to a paid account of the streaming service, which is paid for together with the telco service plan.

Since giving away content for free for an extended duration incurs a significant cost to the streaming service, these kind of partnerships usually involve a minimum guarantee of marketing spend or minimum guarantee of the number of new users brought in by the telco.

The other option for bundling is a soft bundle model, also called an add-on. In this case, a telco subscriber can simply purchase access to the streaming service through their telco account. However, they are either given an extended free trial or discount to the service if they are also paying for a premium package sold by the telco. This means soft bundles usually look something like this (example from Telia Estonia and Spotify):

In the case of this soft bundle, the “Mobile Life” package subscribers of Telia get their Spotify subscription at a discount compared to users of telco packages that have a lower pricing (€3.49 and €5.49 instead of €6.99 and €10.99 respectively).

Since the discount given to subscribers is smaller, soft bundles usually assume the telcos to do less marketing for the combined offering, instead relying more on organic growth. Costs for both sides in case of soft bundles are smaller, so it can often be easier for both parties to come to a commercial agreement, compared to the hard bundle model.

The third model of partnership for bundling is reselling. In this case, subscribers of the telco can simply purchase access to the streaming service, but instead of making the payment for their subscription directly to the streaming service provider, they pay through the telco’s billing channel (usually a monthly invoice or carrier billing). An example of this would be Digi Malaysia reselling Deezer.

Streaming services can combine all three models with their telco partners, using different models at different stages of their partnership. For example, a hard bundle can be used during the initial intense market entry period to maximize new user growth, while soft bundles and reselling can be added on later. 

The results of user acquisition from bundle partnerships are entirely dependent on telcos, as they are the ones managing the marketing activities. Telcos have an versatile toolbox of marketing options available to them and amplifying the bundle offer with promotions has significant impact on the results of the partnership:

What happens when a bundle ends?

Hard bundles are the best way for streaming services to bring in new users because both the incentive for the consumer and the telco marketing commitment is the biggest. At the same time, every hard bundle eventually comes to an end. That is the point where users who were previously on a free trial of the streaming service decide to either continue on a premium plan or cancel their account.

Usually, the hard bundle lifecycle looks something like this:


During the free trial of the bundle offering, telcos already get what they want out of the partnership, which is people upgrading to a premium service pack. Once the free trial runs out, there is little motivation for telcos to make sure that users stick around with the streaming service and convert to its premium offering.

This means the user journey from activation to trial to paid access needs to be as seamless as possible. One way to do that is to continue using the same mechanism the user was identified through for the free trial in order to continue charging them. For example, in case of a mobile operator, the user’s phone number can be charged using carrier billing; in case of a set-top box, the TV provider’s monthly invoice can be used.

If a billing mechanism is not included during the initial trial sign-up that provides a smooth transition to paid access, churn from hard bundles can be drastic. As an example, if the free trial is simply cancelled at its end and the user is required to enter their credit card details to keep their access to the service, churn will be far higher.

Bundle launches: whether to do it yourself or use a partner?

Streaming services usually start out launching bundle partnerships not by the dozens, but rather focusing on one or two bundles in a few core markets. In such a case, handling the commercial and technical complexities of each partner and custom setups is relatively simple.

However, rolling out bundle partnerships by the dozens quickly creates overhead, as every partner has a different commercial setup and a different technical platform with constantly changing API-s:

When planning for a bundling roadmap, keep in mind that every new bundle partnership means starting from scratch and every launched partnership needs to be maintained, putting a significant operational burden on the team.

Fortumo’s bundling platform in the meanwhile is already pre-integrated with telcos, TV and internet service providers. This means we take care of the heavy lifting on behalf of streaming services who can quickly plug in new telcos and focus on their core business rather than dealing with operational topics.

If you’re interested in learning more about bundling partnerships, download our white paper below.

The white paper covers the benefits of bundling for streaming services, the different partnership types, how bundles are set up from a technical perspective, what results bundling can bring and how marketing activities impact the success of such partnerships.

Enter your contact details below and download the white paper immediately!

Revenue calculator
Do the math: how much would your revenue increase with carrier billing?
Revenue calculator preview image

Content categories