5 Ways To Make Money With Bundling
Cable operators and communications service providers see huge opportunities emerging from the intersection between digital television and the Internet to create an interactive “anytime, anywhere” TV experience for their customers.
This opportunity calls for systems that enable carriers to offer thousands of different subscription packages over different applications (like interactive TV, time-shifted TV, catch-up TV, personal video recorders, pay TV, etc.) and across multi-channels without having to build complex systems for content delivery every time an innovation is required. Thus, the challenge becomes how to manage available inventory assets efficiently and then effectively bundle them to maximize revenue.
Bundling as a strategy often involves four variables:
• Volume – There must be economies of scale and scope because bundling typically increases unit sales volume.
• Margins – The margin cost of bundling should be low.
• Exposure – The exposure to new clients and channels should be high.
• Risk – There is risk to the consumer as well as to the provider.
Risk is an interesting element. From the provider’s point of view, the risk of a bundle is lower return on items purchased in bulk on behalf of the consumer (content, carriage or delivery fees and packaging). Consumer demands are varied. Interestingly, different parts of the bundle are often inversely correlated. If bundling is not executed correctly, then it might result in lower margins with potential channel and carrier conflicts.
While many operators still view bundling purely as a means to push less-popular inventory along with high-demand products, there is more to be had. The opportunities are much larger, and identifying them is the key to success in the digital world. Here are five effective ways product bundles can create monetization opportunities:
Be Sticky and Flexible: Due to the wide choice of content available to users and the paradigm shift of consumer outlook from “what I get” to “what I want,” companies should take advantage of mapping the flexible package capped with recommendations to make it more relevant for the consumers. Mapping of bundles with special or real-time offers with or without seasonal impacts also enables companies to push more content to the consumer. This not only saves time, it increases stickiness, persuading subscribers to use more content and increasing average revenue per user.
Provide ‘Anywhere You Want It’ Products and Services: Because of the explosion of new media/devices or interactive applications that include VoD, time-shift TV, catch-up TV and more, it’s imperative that consumers be able to access the content at many touch points. In this scenario, product bundles offered any time on any device can attract them to the service provider and allow a more seamless experience anytime, anywhere – increasing incremental average revenue per piece of content.
Tune The Marketing Machine: Reports regarding the performance of a bundle (including the ability to and drill down and understand more about consumer behavior) can be quite valuable. Such metrics enable media companies to identify up-sell and cross-sell opportunities. Selling more – and selling more frequently – contribute to incremental revenues, be they from increasing geographic penetration, subscription increases, seasonal and usage targeting, content category tuning or providing the content across multiple media.
Map The Inventory: Bundling can help operators maximize total ad revenue. How? By mapping the inventory across multiple delivery points – primetime and non-primetime – using price tuning to optimize yield while focusing on improving ratings and products.
Give More To Get More: Bundling allows companies to satisfy those customers who may not wish to buy individual products. It also offers the ability to deliver greater scale.
It’s critical to define how bundling of carrier charges, content, advertising and other packaging fits within your business’ game plan as well as the experience (and impressions) you want to leave behind with customers. Operators that stick to the old ad/content models are doomed to follow the path of companies like Borders into the corporate bone yard.
How do you avoid that fate? Having a strong, well-constructed point-of-view and the infrastructure/ product pricing engine that can reflect that perspective coupled with a team that can make it happen makes all the difference. Right content, right packaging, right business model, right place and the right infrastructure allow operators to respond to the world in which we live. It’s important to be selective but, with the right bundle, everyone can win!
Stephen Snyder is global head/Media and OTT Vertical at Wipro Technologies. Contact him at [email protected]