The practice of giving out free or discounted telco services is a standard marketing practice for mobile operators. In emerging markets, reverse bundling is done together with OEM-s: buy a handset, get a cheaper prepaid service pack as part of the deal.
Compared to the traditional bundling model where fixed term contracts are sold with a discount on the handset, reverse bundling works better for emerging markets where consumers are not keen on making the switch from prepaid to postpaid.
Today, OTT providers have grown to be as important for mobile operators as OEM-s, and in some cases, overshadow the telcos themselves in brand recognition. The device is less relevant today and people instead care more about which services they are able to access through it.
Digital bundles have been successfully implemented for the postpaid audience, but the prepaid majority in emerging markets has been left out. As we recently wrote, there are several ways how to overcome that.
So where does reverse bundling fit in? It’s actually quite simple: when a consumer buys a digital service, they get free or discounted data from the mobile operator. A growing amount of mobile operators today have a mobile data provisioning API available, but so far this has been used mostly for basic service reselling partnerships whereas expanding it with OTT partners has much bigger value.
For telcos, enabling this type of reverse bundling model serves three purposes:
Additional revenue is generated from mobile data sales
Consumer habits are changed as they are pushed towards mobile data consumption
OTT providers can directly target offers to subscribers of competitors
Reverse bundling flips the traditional telco-OTT model on its head. But this begs the question, if the value of bundling for OTT-s is to get new users, why would they care about promoting telco services in their marketing channels with reverse bundling?
The main value for OTT providers from reverse bundling is improving their conversion. Today, most streaming services operate using a freemium model and most of their users are not premium. Any marketing strategies that motivate users to start paying for the service are immensely valuable.
If the balance between the subscriber’s lifetime value and the mobile data cost are profitable for the OTT, the model can successfully be used to convert more people into paying customers.
Fortumo’s Trident Bundling Platform supports reverse bundling partnerships as well. If you are a mobile operator or OTT interested in exploring the approach for increased user engagement, get in touch.