The future of bundling: bundle or be bundled

“I don’t say aggregator. I say curator… You have to have somebody who can really help cut out all the noise and help you find what you really want to watch.” — David Bouchier, Chief TV & Entertainment Officer, Virgin Media

Historically, the only way people could get a subscription was directly from the provider, either from their website or the app store. But today, subscription distribution is fast moving towards indirect channels, and this trend shows no signs of slowing down.

Nearly a third of Americans (31%) say they’re “done with standalone subscriptions”, rising to almost half of Gen Z (48%) and Millennials (44%). That’s a huge proportion of people, which steadily grows larger with each passing generation, who won’t sign up unless they can find a bundle or deal.

Bundling is becoming the new default as consumers look to keep their subscriptions in the face of admin fatigue and tighter budgets,, and that’s dividing the market into two camps:

Those who bundle; and those who get bundled.

Trust is everything

When it comes to bundlers, aggregators, like Amazon, and telcos, like Verizon or EE, are best positioned to lead this trend:

“In a world where there is so much choice, you really do want trusted brands. The customers want trusted brands and the advertisers want a trusted home for their brands.” — David Bouchier, Chief TV & Entertainment Officer, Virgin Media

What David highlights here is that the key to a good bundling relationship is trust. This puts telcos at a significant advantage, as they’ve already spent years building relationships with their customers. This is especially important when it comes to billing:

We have the subscription relationship with our customer. They trust us. They pay us every month, which, for example, a screen manufacturer would love to have that sort of subscription relationship” — David Bouchier, Chief TV & Entertainment Officer, Virgin Media

Put simply, customers already have that trusted payment relationship with their telcos, meaning they’re more likely to trust them with additional subscriptions, too.

The incumbency advantage

Consumers are calling out for telcos to step up and bundle subscriptions with their existing offerings. In fact, they’re disappointed if they don’t. Half of Americans (49%) now expect subscriptions to be included alongside their internet, TV or phone, and 51% would switch telco provider for discounted streaming.

As a result, telcos have already become one of the go-to bundlers in the eyes of consumers. What’s more, those same strengths that make telcos attractive to consumers — namely trust, established relationships, and proven networks — also appeal to those looking to be bundled too:

“Our superpower is actually a platform that is really appreciated by people. People don’t want to get rid of our platform. People want to evolve with our platform… We have an installed base, huge distribution power, which obviously the partners that seek to grow their base appreciate.” — Vincent Stevens, VP Entertainment, Telenet

However, it’s crucial that telcos don’t take these inherent advantages that Vincent is describing here for granted:

“We do know one thing: if we’re not the ones offering those subscriptions, then for sure the customers won’t buy them from us. So we have an obligation to support that. If there are other players that also support those bundles, that’s fine — that’s part of the game.” — Chris van der Linden, Director Product Roadmap for Entertainment & AI, Liberty Global

As Chris points out, bundling is becoming increasingly competitive and other organisations can still beat you to the punch if you don’t seize the initiative.

The case for being bundled

On the other side of the binary is being bundled into someone else’s product. For content providers, being bundled can bring some significant advantages like better market entry, higher brand awareness, further reach, and customer growth. These are benefits that, as Joan highlights, you simply can’t ignore if you don’t have the resources that some of the big players do:

“We believe that [bundling] is the future for a service like Viaplay, specifically in some markets. Our content is really good, but not as well known as it should be. Because we don’t have the marketing machine and international markets that others have, I think bundles allow us to get into the final user.” — Joan Cruells, Vice President Partnerships and Growth, International SVOD, Viaplay Group

Kerry highlights another advantage of being bundled. Beyond reaching new markets, bundles also help specialist services reach the audiences most likely to value their content:

“The challenge for a speciality service is always awareness and validated awareness. And that has led to some very strong partnerships that have allowed us to really dig into our segmentation, find those consumers and bring them onto the platform.” — Kerry Ball, EVP for BD & Partnerships in BBC Studios Global Channel and Streaming, BBC/Britbox

However, the ‘be bundled’ proposition is significantly less attractive for telcos. If telcos fail to capitalise on their headstart, they’ll quickly find themselves reduced to being the “dumb pipes” in someone else’s product. So, while the telco is nothing more than connectivity, another brand owns the primary customer touchpoint, the interface, the billing, the upsell potential, and the opportunity to capture loyalty by adding value.

Own the bundle or power it

As bundles become the default, everyone will need to pick a side — build the bundle yourself or become part of someone else’s. And the sooner you decide, the sooner you can start to reap the benefits.

For telcos, the choice is between leveraging existing resources to own the customer relationship, and supplying connectivity inside someone else’s experience. Meanwhile, subscription providers need to choose where they’ll build bundles, and where they’ll optimise for being bundled at scale.

Regardless of which side you choose, those who succeed in this indirect future will be those who can either launch or insert themselves into bundles quickly and at scale. And that means organisations need to get ahead of certain considerations, like partnership agreements, entitlement, and commercial models, to prepare.

The Digital Vending Machine® (DVM^TM) from Bango takes the legwork out of bundling. The DVM connects identity, entitlement, offers, and payment across a pre-existing partner ecosystem, allowing third parties to bring bundles to market at the speed customers now expect.

The future of subscriptions is bundle or be bundled, and everyone in the subscription ecosystem needs to figure out where they fit in before the market decides for them.