One quarter of video subscriptions will be managed by telcos in 2028
As subscription fatigue appears to be taking hold globally, content providers are turning to telcos as a key intermediary between themselves and the consumer in aggregating subscription services into Super Bundles.
The global value of the subscription economy is US $331 billion, per Juniper Research, rising to US $996bn by 2028 of which a quarter will be delivered by telcos believe Omdia.
That’s a startling number backed up by further research that 20% of SVOD subscriptions are already being sold through telcos globally. Super Bundling subscription hubs are increasingly used by telcos, banks and retailers to drive customer engagement, build loyalty and unlock new revenue streams, with 88% of telco leaders planning to launch a subscription hub, according to digital transaction management vendor Bango.
Its research also reveals that 35% of US subscribers have lost track of how much they pay for subscriptions, and that 49% are annoyed they can’t manage all of their accounts and services in one place. As a result, nearly three quarters now say they want one single ‘hub’ for subscriptions. There’s even evidence that suggests 61% of subscribers would pay a higher monthly bill if subscriptions were bundled.
That’s the background to an upgrade its Bango’s SaaS Digital Vending Machine (DVM). The white-label solution allows telcos and other resellers to build fully configured subscription hubs from end-to-end and is already in use at Verizon and Australian telco Optus for their subscription hubs Verizon +play and Optus SubHub.
The update (DVM CX) now means that the DVM comes with a frontend that companies can customise and subsequently launch directly to their customers — essentially saving them time and money by removing the need to code the customer interface themselves.
The bundling technology itself hasn’t changed but the DVM CX now makes creating your own content hub more accessible and feasible. All in, Bango claim companies can save up to 18 months development time.
As Paul Larbey, CEO explains: "For a growing number of subscribers, subscriptions are no longer experienced as a series of one-by-one direct purchases. Subscribers now want to combine services, create bespoke deals, renew on their own terms, and pay through a single, consolidated, transparent bill.
“As telcos, retailers and banks start to offer these sophisticated subscription bundles, the DVM removes the roadblocks. We’ve streamlined the entire process, while providing access to an ecosystem of over 100 subscription providers.”
Verizon claims that using DVM to build its +play marketplace has reduced churn by 60-70% on average among its customers. DVM customers pay an integration fee and recurring monthly license fee that scales as the number of managed subscriptions grows. Contracts are typically for a minimum of 3 years.
The license fee customers pay to Bango is tiered, based on the number of subscriptions (not users) that the DVM manages. As customers launch their DVM offers and the number of managed subscriptions increases, so the license revenue grows.
Another recent DVM customer is Portuguese high street retailer Continente. The collaboration allows customers with a Continente loyalty card to subscribe to Disney+ for exclusive discounts and cashback benefits.
Last September Bango signed an agreement with Disney to offer Disney+ to consumers via telco telecom operator and other service providers via the DVM.
The benefit to Disney (and other content distributors) is a chance to expand reach in increasingly saturated markets.
Forever Subscriptions
Another trend, has been the growth of what Bango call the ‘Forever Subscription’ – those subscriptions that the subscriber says they will never pause or cancel. This is something that has come up in every recent Bango survey.
In the UK, for example, Netflix is the ‘must-have’ SVOD for UK subscribers, followed (some way behind) by Amazon Prime Video and Disney+.
Unexpectedly perhaps, NOW – which includes Sky (Comcast) content – comes ahead of AppleTV+ and Paramount+, potentially because it incorporates a lot of UK sports coverage.
US compared to UK subs
The average annual subscription spend in the UK has reached £696 ($886) per year, with 1 in 8 Brits spending over £100 ($127) per month. The equivalent data from Bango’s US study was 1 in 10 spend over $100. This means British subscribers appear to be spending more per sub than US subscribers, given that the average number of subs in the UK overall is lower at 3.5 vs 4.5 in the US.
The average American subscriber now pays U$924 per year for subscriptions ($77 per month). A quarter (25%) pay U$100 per month, while 1 in 20 pay over U$200 per month (more than U$2,400 a year), according to Bango figures. The much-publicized crackdown on password sharing among SVOD services is only one example of a broader trend, helping drive new sign-ups.
Bango reckons that since password crackdown began, 35% of U.S subscribers are now paying for a service that they previously accessed for free. But there’s a limit on household purses. According to Bango data, continued increases may lead some consumers unable to afford subs, as over half of them (57%) have discontinued their subscriptions because of unanticipated price hikes.
Indirect subscriptions growing
As a result, indirect subscriptions (combined subscriptions, bundles, and third-party selling) have become “a major market”. One in 5 U.S subscribers now sign up exclusively via indirect means, avoiding the traditional, direct subscription process.
A third subscribe via another service they already pay for. “These indirect subscription methods are providing a great way for subscribers to secure the best deal, with 29% now receiving their subscriptions for free as part of a bundle,” the company states. “If content providers want to secure new customers, they can’t rely on direct sign-ups alone. Bundling and other indirect methods will be vital for driving customer acquisition.”
It’s not just cost either which is driving consumers to bundled video services. It’s considered a more convenient way of managing a multiplicity of subscriptions which range from Netflix and ESPN, to Amazon Prime, Duolingo, YouTube, Peloton and Audible. A third of U.S subscribers surveyed by Bango say they’re consistently frustrated with how they manage and pay their subscription bills. Nearly three-quarters of subscribers (73%) want to access and manage all of their subscriptions via a all-in-one hub.
“Creating centralized hubs that prioritize subscriber preferences is not only what’s best for consumers but also what’s best for content providers and subscription services,” Bango outlines. “[Streamers] invest heavily in growing and preserving their user base to retain a competitive advantage. Leveraging subscriber-focused central hubs for subscriptions unlocks important new channels for distribution and fosters an even larger base of devoted customers.
“If subscriber demands aren’t met, there is a risk that they turn away from legitimate content providers for good. Almost a third (28%) of those surveyed say online piracy is the only way to access all of the content they want in one place.”
The new DVM CX offers telcos, banks and retailers a means of quickly launching a branded subscription hub with pre-built templates for desktop and mobile. Among other things it delivers analytics of the performance of subscriptions, bundles and offers, tracking trends in activations and cancellations in real time. The update includes a means to migrate existing, live consumer subscriptions onto a Super Bundling hub with no loss of service; and automated workflows that instantly activate subscriptions when customers select an offer.