Bundling of services has helped enhance engagement, prevent customer churn, drive loyalty, and generate higher customer lifetime value. Products and services of different kinds have been bundled for a long time to attract buyers. In the telco space, bundles have traditionally seen telecom companies offer various services such as mobile broadband, cable TV, voice services as part of one package.
In this space, custom bundling is increasingly common, in which the subscription for a digital service is added to an existing mobile phone plan. Such custom bundling makes the rollout of turnkey bundle package services to pre and post-paid users easier from a telco’s perspective.
For example, Verizon Wireless in the US offered a free Disney+ subscription to its VIP users for a year when Disney’s new subscription video-on-demand (SVOD) service first launched in 2019. For the last four years, we have enabled Amazon Prime video and music bundles with over thirty-five mobile carriers worldwide.
Types of bundling
In a hard bundle, subscribers are offered a free trial to digital service for a limited duration, say three or six months. Once the trial period is over, the users are converted into paid subscribers of the digital service. The subscription fees are paid through their monthly mobile phone bill if users continue on the same tariff plan.
In a soft bundle, digital services are offered as an add-on option – where the user is charged separately and can pay using direct carrier billing (DCB). Subscribers may be offered promotions, such as an extended free trial or a discount to the digital service.[i]
Bundled subscriptions globally, in general, will reach 830 million in 2022, according to Omdia, a research firm.[ii]
Forty-two percent of respondents said the bundled media service was the main reason they were willing to spend more on their telco subscriptions. 45% of respondents said bundles either made them spend more on their carrier plans or remain loyal to the telco, or both. According to Ovum’s study, 43% confirmed their loyalties to their existing carrier offering bundled services. Only 5% said that bundling did not impact their loyalty or spending. There is a “direct link between average revenue per user (ARPU) and user-retention effects of carrier-bundled paid media services.”
Bundling allows quick adaptation to such evolving consumer needs, especially given the rich value to users. Bundling makes it easier than ever before for users to ‘sign on to different services, or at least try them.
Bundled services make payments for digital services seamless by allowing users to pay through their mobile phone bills instead of receiving and tracking several bills for multiple digital content services without using credit card details time and again to complete payments. Additionally, users repose greater confidence and trust in carrier customer support when they are subscribed for a service through a bundle.[v]
Video streaming explosion
After the initial burst, the subscriber growth for Netflix, Disney+, and new services like HBO Max and Paramount+ has flatlined in the United States. Most of these and upcoming OTT video streaming services are looking at Asia, Latin America, and Europe to spur subscriber growth. Bundling partnerships with mobile carriers in these markets present a tremendous win-win for OTT brands to acquire new user segments while leveraging the brand visibility and trusted relationships the mobile carriers have with their subscribers. Direct carrier billing works well as a native payment layer to enable such bundles at scale for OTT merchants and carriers alike.
[i] DOCOMO Digital. Enabling Telco Bundling. Available online at: https://www.docomodigital.com/service-solutions/enabling-payments/telco-bundling/
[ii] Ovum. The Telco Services Bundle Unraveled. Available online at: https://www.omdia.com/~/media/Informa-Shop-Window/TMT/Files/Ovum-Telco-Services-Bundle.pdf
[iii] Mobile Payments Today. Direct carrier billing makes the transition from digital content to physical goods (Part 2). Available online at: https://www.mobilepaymentstoday.com/articles/direct-carrier-billing-makes-the-transition-from-digital-content-to-physical-goods-part-2/
[iv] Ovum. OTT Media Services Consumer Survey & OTT CSP Partnership Study. Available online at: https://www.amdocs.com/sites/default/files/Ovum-OTT-market-study-2019-20.pdf
[v] Ovum. OTT Media Services Consumer Survey & OTT CSP Partnership Study. Available online at: https://www.amdocs.com/sites/default/files/Ovum-OTT-market-study-2019-20.pdf