Content bundling is an increasingly popular business line for telcos to grow their digital business revenue and increase customer loyalty. While the overall telco industry is growing at roughly 1.5% per year, Juniper Research forecasts bundling to drive carrier billing revenue to an impressive 300% increase by 2022. In the video streaming segment, over 150 telcos have already launched bundling partnerships according to Ovum.
At the same time, launching bundling partnerships can be challenging for telcos. Since the goal of bundles is to differentiate the telco offering from the regular one on the market, additional incentives have to be provided for the consumer to sign up for the bundle instead of directly with the OTT. This incentive can be longer free trials, additional discounts or extra features provided with the bundle.
In return for providing such incentives, the OTTs expect a guaranteed promotion of their service from the telco to recoup money lost due to providing parts of the service for free. Because of the large sums of money involved and required for promotions, telcos and OTTs often have a tough time in coming to a mutually acceptable agreement. In some cases, we have seen discussions last for more than two years.
There is however a faster way to start increasing revenue and leveraging the brand value of digital services for user acquisition: reselling. A growing amount of telcos are partnering up with OTTs by becoming their vendors and setting up digital storefronts through which they sell OTT services to their subscribers, effectively becoming digital experience enablers. Here is how a reselling flow might look like from a consumer perspective (click for bigger):
In case of reselling, the telco and OTT agree on the commercial model, based on a revenue share out of each OTT license sold, and the telco is free to choose how they wish to leverage and promote the digital service in their marketing campaigns. Reselling accelerates the launch of new digital services for telcos for multiple reasons:
- Many OTTs have fixed reselling packages, leading to faster agreements
- No technical work required on the OTT side lead to faster integrations
- Freedom of choice in where and how much to promote the digital services
- No cannibalization from other payment methods as telcos host the reselling flow
- Lower risk, as no promotional guarantees are required
- Management, control and transparency of the user lifecycle for the telco
Bundling and reselling aim to achieve different goals and are not mutually exclusive. While for bundling the goal of telcos is to upsell subscribers and achieve bigger sales of the telco’s own services, reselling provides an opportunity to earn revenue from the sale of digital services directly.
This means telcos can and should pursue both activities in parallel as this allows to bring on board more digital partners faster, increase the choice for their subscribers and enables segmented targeting of users with a more flexible range of marketing campaigns.
Telcos looking at both models should keep in mind that our Trident Bundling Platform can be used for both bundling and reselling, requiring minimum effort from telcos to launch thanks to its turnkey setup and comprehensive features:
- Landing page management on behalf of the telco
- Consumer authentication with the telco and OTT
- Free trial and discount provisioning
- Charging solutions using DCB, cable TV and landline bills
- Consumer-related notifications and unsubscription flow management
- Reporting and analytics through Fortumo Insight
Interested in hearing more about Trident? Get in touch.