Globally, Video-On-Demand (VOD) companies and telcos had teamed up to launch 452 bundle or add-on partnerships by the end of Q3 2020, according to Omdia. On average, a telco has 1.9 VOD bundle partnerships while consumers subscribe to 3 to 5 different VODs.
Bundling holds great advantages for telcos. They can leverage OTT platforms like VODs to raise customer loyalty. In a survey by Omdia encompassing US, UK, China, Brazil, France, and Australia, 63% of respondents said they purchased a bundle of two or more services. Almost 50% of respondents said they purchased a bundle because “it was a good offer at the time of purchase,” while 32% said it was cheaper to buy a multiplay package than to purchase each service separately. Clearly, upselling bundles does help retain telco users.
However, there is a downside. The two main reasons why users cancel a VOD subscription are high prices and lack of content.
When users sign up for a bundle, they usually look forward to the new and fresh content from the OTT service. Over time however, consumers feel less enthusiating about the bundle’s value. As subscriber interest fades, they cancel their OTT subscription which often means downgrading their telco package as well.
Additionally, with new major streaming services coming online, most consumers just can’t keep up with that many services. It’s just not financially viable to subscribe to everything. This could explain why consumers are directly subscribing to streaming services outside of telco bundles. They can choose exactly the service and package they want, and they have the freedom to jump in and out of their subscriptions at any time.
So the the risk of telco subscriber churn increases if they cancel the bundled services.
Is there a bundling strategy that telcos can implement to retain subscribers?
Here are a few to consider.
- Customise to consumer wants
It’s a fact that most consumers’ main priority is to seek value and convenience. Having a single provider to that is able to meet all their content needs and operators would be greatly convenient to consumers and telcos are in a great position to provide that.
Telcos have the ability to provide a single login and a single bill in a single environment, offering consumers seamless access to the OTT services they want.
- Negotiate value-add bundles
The rising number of streaming services is offering consumers more variety and quality content at their fingertips than ever before. The average consumer would not be able to afford to subscribe to all the content they want. This provides an opportunity. If telcos can design bundles that can provide customers with more options of services on a single platform, it could be key to maintaining consumer loyalty.
By bundling several services, telcos give their subscribers more choices and more reasons to stay longer on the service. Telcos can leverage on their large customer database to negotiate win-win partnerships with streaming platforms to offer multiple-service bundles.
- Create non-traditional partnerships
Ovum states that “OTT TV content is increasing in reach and should be considered an essential part of the bundle in the next five years.” Translation: OTT bundling is going to be nothing new in a few years.
As consumer demands evolve, there are opportunities for telcos to relook at their bundle options to satisfy what the consumers are looking for. Telcos can innovate their partnerships and go beyond the traditional OTT and gaming content and tap into a wider set of needs in the market.
For example, telcos may bundle security systems that connect wirelessly to a network for live remote monitoring. The Internet-of-things is a great opportunity for telcos. While still in its infancy in certain markets, the global market is expected to hit USD 750 billion in 2021, according to an analysis by Gartner.
By creating such non non-traditional bundles with innovative companies, telcos can position their bundles to be more relevant and attractive to consumers not just in the present but also in the future.
There are still opportunities for better subscriber acquisition, loyalty growth and revenue improvement with traditional bundling strategies. But applying some forward-thinking, innovative bundling and partnership strategies can result in better customer retention and acquisition, as well as revenue growth – if done correctly and offered to the right customers at the right time.
On the back end, the key for the mutual benefit of all parties is overcoming integration challenges and improving the consumer experience is. Apigate has wide experience in these areas.
If you would like to learn about how bundles are enabled from a technical perspective, and how to design a great customer experience around it, contact Apigate. We have deep experience helping mobile operators and service providers identify monetisation opportunities and handle the integration process efficiently.