Bundle partnerships are a great marketing tool for telcos. Telcos use bundles to get new subscribers, upsell existing ones and grow subscriber stickiness.
Modern digital content bundles (VOD and music streaming services) started taking off 6-7 years ago. The market was quite different back then: there was one major VOD (Netflix) and one major music streaming service (Spotify) on the market. One video bundle and one music bundle was enough to achieve the goals of user acquisition, upselling and retention.
Things have changed quite a bit since then.
The digital content ecosystem has become fragmented
It took Netflix 15 years to reach 60 million subscribers. Disney+ reached the same number in 1 year. Netflix changed the way people consume video content, but also paved the way for other companies to carve a piece out of the market. By 2024, it’s estimated that more than half of VOD subscriptions will be with services other than the big four (Netflix, Amazon, Disney+ and Apple TV+).
The bigger choice in VOD services has also changed consumer behavior. 76% of people now subscribe to more than one streaming service because content differs between the services. Besides the global ones, regional & genre based services have a notable position in the market as well. Korean dramas, French cinema, sports, anime and others fill the gap left by the bigger players.
There is no such thing as an average subscriber
One bundle for the entire subscriber base works if all subscribers are the same. But subscribers are different in both their demographics and tariff plan usage. Consider the three following audiences:
- A family: 4 different people using a quadruple play offer (broadband, television, telephone, wireless) interested in live sports, drama shows and kids cartoons
- Student couple: 2 people using only a smartphone plan interested in documentaries, drama shows and e-learning
- Millennial gamer: 1 person using a smartphone plan and a wireless plan interested in e-sports, video game streaming and games
Running bundling marketing campaigns in these segments requires different content and promotional offers that go beyond one service and one hard bundle for everyone.
Not only is there a need for many VOD services to cover the different tastes. There is content beyond video and music relevant to subscribers as well, such as gaming and e-learning.
Telco bundles need a makeover
Each bundle partnership starts from scratch: every partner has their own technical platform. As a result, the telco cannot recycle the integration work for other partners. This is not an issue when the number of partners is small, but it becomes painful when the list of partners grows.
Every new partnership launched also creates extra work from operational activities. Partner relation management, analytics, reporting, settlements and technical maintenance become an ongoing chore.
This becomes unmanageable eventually. If one bundle partner requires on average 10 hours of work per month, 5 partners will already need 50 hours.
The complexity increases further from differences in subscriber profiles:
- The family of 4 from the previous example will likely expect one hard bundle with 3 different services
- The millennial gamer on a postpaid SIM card will expect a soft bundle of 3 different services that they can access one at a time
- The student couple will want dramas during spring break and e-learning throughout the rest of the year
The ideal approach is for bundles to include offers from multiple content partners. This gives telcos the ability to provide different subscribers customized with offers based on subscriber’s profile.
Unfortunately, creating such a complex setup needs a lot more work to be done. This means telcos often need to be content with having a few hard bundles for only their highest-ARPU subscriber segment.
Do-it-yourself or bundling-as-a-service?
The current approach to bundles has been to connect partners one-by-one through a do-it-yourself (DIY) approach. This is not likely to work in the future due to several reasons:
- The digital content market is becoming more fragmented. There is not a single “magic bullet” service that meets the expectations of every subscriber. Telcos need to bring new partners on board at a faster pace than before
- Digital content merchant growth rates are accelerating: compare Netflix and Disney+ time to market. It’s hard for telcos to accelerate the DIY approach to bundles. This means grow faster on their own, but bundles still take a lot of time to launch. Every passing month reducing the value proposition of the bundle
- More partners at a faster rate increases the time spent on technical integrations and operational support. The team will become overburdened and will only have to deal with bundle partnerships
At the same time, bundles are not the core business of telcos. They are a marketing tool. Every hour spent on bundles means an hour taken away from focusing on improving the subscriber experience.
The DIY approach also means telcos take upon themselves the risk of putting a significant bet (marketing resources and integration time) on a few selected partners that may not match the expectation of the subscriber segment that is being targeted.
Fortumo offers a different approach. Our Trident Bundling Platform gives telcos access to bundling-as-a-service. Digital content providers plug into Trident. Telcos define the commercial terms with the providers. Everything else is managed by Fortumo:
- partner integrations & onboarding
- offer and subscription management
- program management
- business intelligence tools
- platform upgrades
- operational support & monitoring
These are the DIY aspects of bundling that are slowing new partnership launches down today. By moving to a bundling-as-a-service approach, telcos can bring on board more bundling partners and secure business growth. If you’re interested in learning more about how Fortumo helps, get in touch with our telco relations team.