Telcos signing more video bundling partnerships than ever

September 28, 2021

Telcos signing more video bundling partnerships than ever

Jonathan Kriegel


Over the top (OTT) video bundling partnerships between carriers and content service providers are growing at a healthy clip, according to research company Omdia. Tariff bundling deals in the first quarter of 2021 outnumbered simple carrier-billed add-ons (where over the top subscriptions are added to users’ bills), and are up 28% since the end of 2019.

There is a growing list of examples of tariff bundling offers, where OTT subscriptions are included in the price of specific carrier tariffs, becoming permanent for as long as the user remains on that mobile tariff plan. The trend towards OTT video integrations with carrier TV platforms is also intensifying. Over half of the partnerships tracked by Omdia in the first quarter of 2021 involved such integrations after their number grew 34% between the end of 2019 and the start of this year. Most of these integrations (70%) involved direct carrier billing or tariff integration which is a significant shift from a few years back.

Although Netflix is the clear global leader in the volume of live carrier partnerships, it no longer leads in terms of new deals. Between October 2020 and March 2021, it forged seven new partnerships, a joint fourth ranking with Starzplay and behind Discovery+ (8), Disney+ (10) and Amazon Prime Video (15). Amazon is also active in carrier bundling on other fronts including its book, gaming, music, and Prime Services, according to Omdia principal analyst Guillermo Escofet.

Multiple subscriptions are the norm among SVOD users, and Netflix bundles may have peaked. So, it makes sense for carriers to differentiate themselves by pursuing partnerships with less ubiquitous services that are only now beginning to expand beyond the US and offering multi-OTT service bundles.

Aggregators of paid OTT services

Carriers have ambitions to act as aggregators for paid OTT services, i.e. bundling several together and offering users a discounted price for multiple subscriptions. That could include several SVOD services or span different media types such as video, games and books, the latter competing with the mega bundles on offer from Amazon and Apple.

Australian telco Optus, part of the Singtel Group, is an excellent example after launching an OTT subscription management service called SubHub with the provisioning backend enabled by DOCOMO Digital. Subscribers of both mobile and broadband plans get a 5% discount on the aggregated price and those who add three or more get 10% off.

Our Chief Commercial Officer Jonathan Bennett believes that the last thing telcos like Optus want is investing vast amounts of time, money, and effort in setting-up partnerships with multiple OTT service providers, especially when the market demands faster deployments. Telcos recognise the value of video subscription bundling and are therefore more receptive to forging bundling and payment partnerships with OTT providers. DCB builds a payment rail over an existing trusted relationship between the consumers and their mobile carriers and offers such an alternative. And it serves as an acquisition channel beyond payments for OTT providers to drive user growth in new segments and markets.

The Optus SubHub approach also presents new options to consumers regarding how they sign-up to and manage multiple subscription services, which feeds into a superior customer experience and creates a more robust loyalty play around Direct Carrier Billing (DCB) going forward. The SubHub approach is as much about customer acquisition beyond payments, which will help carriers drive adoption. And DOCOMO Digital’s provisioning platform can be deployed by other telcos looking at aggregating multiple OTT services already integrated on the platform, quickly and reliably.

SVOD bundles critical to DCB revenue

For the moment, Optus is very much the exception rather than the rule – most carrier bundles don’t come with this sort of offer, at least not yet. Omdia believes more telcos will adopt the same approach. Still, a significant barrier is convincing OTT service providers that it is worth dropping their wholesale rates when their services are aggregated alongside those of rival providers. However, it’s an easier sell when those services are complementary, such as when they include video and music.

All OTT service providers usually discount their services for limited period offers and generally have big budgets set aside to support user growth. And carriers can also subsidise part of the discount based on the return on investment they expect from bundling.

Another new bundling model emerging is where free access to OTT services is offered to prepaid customers. Every time they top-up their mobile balances, they commit to buying a specific tariff plan with that balance. This approach is becoming popular in emerging markets, especially in markets like India and Indonesia, where mobile subscribers are predominantly prepaid, and carriers want to build stickier relationships with the subscriber base.

An alternative model involves OTT service providers agreeing to standard offers pre-approved by carriers, enabling bundles to be quickly approved and rolled out. However, the discounts and free trial periods are usually not as generous as with regular bundling. The main interest is from OTTs in non-core bundling areas outside video and music.

According to Omdia, the volume of carrier billed revenue from video, and specifically from subscription video on demand (SVOD) services like Netflix and Disney+, is second only to that made by games. If any changes to app store billing policies enable more choices for consumers, then video bundling partnerships will become even more critical to telcos DCB strategies going forward. As a leading aggregator, we have our task cut out to support our telco partners on this journey.

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