Bundling Boom: Telcos Propel 20% of Streaming Subscriptions in 2023

By Greg Tavarez August 18, 2023

Telecommunication companies have become prominent distributors of video and music streaming subscriptions, leveraging this position to potentially extend their influence across a burgeoning spectrum of subscription-based services. Some offer Apple (News - Alert) TV, some offer Hulu, and some offer Disney Plus. The reason for this is to boost the telco’s market standing and present a countermeasure against customer attrition and declining average revenue per user, or ARPU.

Telcos are smart, too. They know consumers struggle to pay and manage the massively growing number of subscriptions they own. (Some people likely have more than five subscriptions they have to manage.) At the same time, subscription providers find it increasingly expensive to acquire new users.

An opportunity is presented here for telcos, and they are jumping on it. In fact, 20% of all streaming video subscriptions are now sold through bundling partnerships with telco companies, reaching 25% by 2028, according to a new report from Omdia and Bango. Global revenue from video, music and other subscription-based services sold via telcos will total $24.8 billion this year and grow to $42.8 billion in 2027.

Still, streaming partnerships alone may not be enough to get providers out of the woods. As it currently stands, the situation is challenging. Telcos face saturated markets, declining revenue per user and non-stop churn. While network traffic will grow by 219% in five years, revenues are only projected to grow by 14.6%.

A new strategy may be needed. And now, one has been created in the form of “super bundling.”

Super bundling, a term potentially originating from the early days of pay TV, finds prominent application in the realm of big tech, exemplified by Amazon Prime and Apple One. These bundles consolidate diverse subscription services into a single package, offering cost savings compared to individual subscriptions.

For instance, Apple One Premier grants subscribers access to an array of Apple services like cloud storage, video-on-demand, music streaming, gaming, health and fitness, and digital newsstands, all at a price over 40% lower than separate subscriptions. Amazon Prime similarly includes in-house media services such as video, music, e-books, gaming and photo storage.

Despite their core businesses of e-commerce and devices, Amazon and Apple have ventured into content services, enhancing platform engagement. Super bundling enhances the attractiveness of their value-added offerings, enticing customers and undercutting specialized competitors like Netflix and Spotify (News - Alert)

Telco-driven super bundling serves as an inclusive platform for standalone content services to form a collective advantage. Unlike restricted offerings like Amazon Prime and Apple One, telco super bundles present a broader selection, spanning multiple providers and service types. Telcos are uniquely positioned for versatile pick-and-mix bundling due to their extensive distribution and payment mechanisms.

"With a fifth of SVOD subscriptions now sold through telco bundles, it's clear there's a paradigm shift under way in the streaming market,” said Anil Malhotra, Bango (News - Alert) co-founder.

Few examples of true telco super bundling, characterized by a comprehensive array of subscription management and content discovery features, currently exist. Notable among these is Australia's Optus (News - Alert) SubHub, which offers bundled service discounts and seamless subscription linking. Verizon's +play in the U.S. expands choice across various sectors, including entertainment and fitness, featuring unique deals like the combined Netflix and Paramount Plus offering.

South Korea's SKT's T Universe boasts the most extensive telco super bundling, aggregating around 85 services, including physical goods. While nascent, telco super bundling holds substantial promise, empowering telcos to play a pivotal role in the growing OTT subscriptions economy, transcending their conventional status as passive service providers.

“Super Bundling is not only a churn buster — the more services telcos get customers to subscribe to, the more stickiness they create — but can also turn into a revenue stream in its own right,” said Malhotra.

That said, the journey toward successful telco bundling is laden with intricate technical and commercial complexities. Nothing is easy, right? Price subsidization, due diligence on prospective partners, fraudulent users, activation rates, backend integration and unavailability of unified billing are a few of the challenges faced with telco bundling.

It's apparent that realizing the full potential of telco super bundling necessitates strategic outsourcing, given the multifaceted challenges that stand in the way.

Edited by Alex Passett
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