Nearly two years ago, former TCI Cable CEO and Liberty Global Chairman John Malone offered a rare interview to financial news channel CNBC. Like many media and entertainment executives, Malone had streaming on the mind — the industry was emerging from a time when media companies were spending big on content production and marketing to build up their direct-to-consumer services, but few firms were seeing any substantial and sustainable returns.
With his usual calm cadence, Malone laid out the problem: Consumers like streaming, but companies were working too hard to placate everyone, everywhere all at once. Companies were losing millions of dollars offering their subscription services at low cost. Subscribers could churn out of a service with a simple click, and trying to win them back was an expensive proposition. TV and film fans weren’t signing up in droves to watch original programs and reboots — in the months following the coronavirus pandemic, they seemed to want TV comfort food, those familiar lifestyle and sitcom re-runs they’d watched years before.
Something had to change.
“Everybody I know is taking a hard look at their content budgets going forward and trying to be more targeted in terms of what audience they’re after, not try and have everything for everyone, perhaps,” Malone said. “I’m a believer in an à la carte menu for the consumer, but if you’re gonna keep churn down, you have to bundle.”
Malone offered Disney as an example: A company that was heading toward streaming profitability by bundling its own services like Disney Plus and Hulu together, at a price that was lower than what each service cost on its own. But that wasn’t going to work for everyone, Malone said. Eventually, companies were going to have to consider bundling their services with other companies.
The idea astonished TV host David Faber. “That level of cooperation, you really think you could ever see that?,” Faber qustioned. “I just wonder how that would work in your mind.”
Malone assured him it could work. “It’s been discussed, David,” he posited, adding that entertainment companies were exploring different ways to stabilize their services.
A few months later, Verizon announced it was launching a bundle for its wireless and home Internet customers that allowed them to subscribe to the ad-supported tiers of Netflix and Warner Bros Discovery’s (WBD) Max for a combined price of just $10 per month — or $7 less than what each service would cost on its own.
The subscription bundle would be offered through Verizon’s streaming marketplace called Plus-Play, which the company debuted months before Malone went on CNBC to sing the praises of the streaming bundle. At the time, little was known about Plus-Play or how Verizon was able to pull off a bundle between what seemed to be two streaming rivals. But Linda Hardesty, then the executive editor at Fierce Video, was one of the few telecom-focused journalists to connect the dots: In her coverage of the bundle, she noted a company called Bango had made waves at the Mobile World Congress in Barcelona earlier in the year when it suggested a possible working relationship with Verizon and other telecoms in the United States aimed at bringing “some order to the chaotic streaming landscape… .”
The implication was clear, and Hardesty’s instincts were right. Bango was, indeed, the link that made Verizon Plus-Play and the Netflix-Max bundle possible.
More specifically, Bango’s Digital Vending Machine streamlined the process for service providers like Verizon to sell ancillary subscriptions to other services like Netflix and Max, without having to work through the strenuous exercises of technical implementations like subscription management and payment processing. Before Bango, launching a streaming marketplace and hooking in various services could have taken months, if not years. But by hooking into Bango’s Digital Vending Machine, companies are able to move their marketplaces from idea to reality while helping streaming services achieve rapid scale beyond what they could do alone.
Why would companies like Verizon, Netflix and WBD want to do this? Turns out, offering discounted subscription bundles is a good way for a service provier to increase customer satisfaction and decrease churn — the very elements Malone said entertainment companies needed to address.
Bango’s aspirations are bigger than just streaming — it wants the whole world to bundle. At the TV of Tomorrow Show in San Francisco earlier this spring, Bango Vice President of Marketing Giles Tongue spoke with The Desk about the company’s origin story, its foray into the world of entertainment-related bundling and how Bango intends to help other sectors scale their services and subscription-based offerings.
This interview has been lightly edited for clarity and flow.
Matthew Keys, The Desk: Give me the 30,000-foot view on what Bango is — how did it start? How did it get to where it is now?
Giles Tongue, VP of Marketing, Bango: We’re helping subscription businesses of all sorts — video on demand, streaming, video games, all sorts of different subscription products — distribute those products and services through indirect channels. Historically, for us, that has been through partnerships with telcos — and, specifically, mobile phone operators. But, it really could be anyone that wants to offer a subscription product.
We take these different types of products and bring them together into content hubs, an evolution that we call “super bundling.” We’re helping subscription-based businesses scale with speed by offering a standardized approach to bundling through indirect channels.
Today, we’re an AIM-listed business (Editor’s note: AIM is the alternative investment market in London, comparable to the NASDAQ in New York City), but our business dates back to the late 1990s, and we became a leader in direct carrier billing. Basically, a customer could pay for something with their mobile phone rather than a credit card or some other kind of payment method, and the charge would appear on their phone bill. This really took off in places like Japan — physical and online retailers liked it because there are more guarantees, and customers liked it because it offered a secure and frictionless way to pay for things. Customers also liked it because they were able to pay for something with a device that they already have, in places where getting a bank account might be difficult. In Japan, even Amazon took payment through mobile phones early on. We established a large business built around mobile carrier billing.
The Desk: In our pre-interview, I mentioned that mobile carrier billing was big in parts of Europe in the late 1990s and early 2000s when flip phones were becoming popular, and people realized they could buy and install custom ringtones right from their phones. There were ads all over the place — in magazines, on billboards, during TV shows — telling people to text a short code if they wanted to buy a specific ringtone at a certain price. Now, though, if you were still in that market, I’m not sure how big of a business it would be — it seems like most people just keep the default ringtone on their iPhones or Galaxies or whatever they have. But, are you still in that market?
Giles Tongue, Bango: We still do direct carrier billing — it’s not so popular in the United States these days, but it’s very popular in Latin America, parts of Europe, the Middle East, Asia. There’s even parts of the United Kingdom where it’s still popular. Yes, it is somewhat of a flat market, though, which is why we saw a bigger opportunity to get involved in subscription bundling, and that’s the direction we went.
The Desk: And that’s your primary business in the United States, right?
Giles Tongue, Bango: That’s right. We’re very interested in introducing our telco and content provider relationships to the idea of subscription-based super bundling. We’ve been offering a bundling solution for five-plus years, and some of the current telco relationships stretch further back.
We think of it like this — the telcos have a long history of bundling things together on their own, right? One of the original telco bundles was talk time, text messages and wireless data on the same bill. We saw an opportunity to offer additional subscription products that could be used to sweeten the deal for telco customers. We thought, could telcos offer a better deal if you could get for example Netflix included in the price of wireless service — maybe make it free for a year, or something like that?
The Desk: That’s how my Netflix is billed — I receive it through T-Mobile as part of my service, but I also have the option to upgrade my Netflix tier if I want, and that upgrade is paid for through my wireless plan, all on a single bill. T-Mobile was one of the first to see the value in that, but they’re certainly not the only one. Verizon is doing something similar, and I believe Bango is involved in that partnership?
Giles Tongue, Bango: That’s right. So, what Verizon has done is really interesting, and we see that as the gold standard of super bundling.
One element of their bundle experience is that if you sign up for Verizon service, you get something for free, a perk. Last year, they offered NFL Sunday Ticket for free with certain plans. That is a good customer acquisition tool — the idea of offering something for free, to convince a subscriber to start or upgrade their service.
The other thing Verizon did is they created Verizon Plus-Play, a content hub that includes over 40 different products. It’s quite a broad range — Netflix, Max, etc. — and the hub also includes gaming, productivity, educational, lifestyle and well-being services. They’ve got a very broad range of subscription-based products. Where we come in is we help them sell those products easily — they connect to our platform. We connect with different service partners and handle the sell-side transactions, including payments. When a subscriber purchases a particular offer from the telco, Bango checks with the content provider that the subscriber is eligible for that offer (for example, that they haven’t had that offer before), and then gives the green light to the telco to complete the purchase, and grant access to the service. This all happens more or less instantly. Bango makes something quite complex, very simple for all parties.
We’re making that entire experience very easy to do, particularly when we already have the technical relationships with the telcos like Verizon and the service providers like Netflix. Both parties benefit from a one to many connection thanks to the Digital Vending Machine, which of course helps with scaling and connecting to addition partners in our ecosystem down the line. We have the platform that makes integrating both sides of that equation easy.
The telcos have a lot of reasons why they might want to offer a content hub for super bundling, from customer acquisition incentives to higher customer retention, reducing churn and better engagement.
The Desk: Churn stands out to me as an incentive. Telecoms and entertainment providers have experienced a lot of pressure over the past few financial quarters to drive up customer acquisitions, increase average revenue per user (ARPU) and lower churn rates. Last year’s holiday promotions didn’t really move the needle on customer acquisition across the three major wireless service providers in a way that I think they were expecting. And it appears pretty clear that, as customers evaluate their service options, what stands out from the usual talk, text and data are ancillary perks like plans that include streaming services.
Giles Tongue, Bango: So, I think we’re probably coming out of the second generation of bundling: the perk was given away free as a sales promotion, and in that situation, it’s mostly funded by the telco. They took a hit on their sales margin that, in the past, they were happy to take because they acquired a customer.
Now, what we see as the third generation of bundling, often called Super Bundling, you see telcos selling multiple different types of content as part of the service experience. They’re doing it through a content hub like Verizon Plus-Play. By doing that, it becomes a revenue additive. ARPU is going up, because the value of the customer is increasing. If they can get a customer to purchase two, three, four or five different services as part of a super bundle, suddenly they’re getting a revenue advantage as it relates to churn reduction as well.
I think the CEO of Verizon recently spoke about churn reduction through bundled customers — the more a customer bundles, the less they’re likely to churn out. We also saw a recent webinar from Parks Associates that included data from an Internet Service Provider, and the crux of the study was that the more bundled products a customer takes, the higher the Net Promoter Score, the stickier that customer is to a service, and that lowers churn.
We see that playing out in our own data as well, where a bundled customer is less likely to churn compared to a customer that has been acquired directly. So, we see this as a situation where both sides are winning on the issue of lower churn. It is a very strong component of Super Bundling.
The Desk: That makes sense. If you’re a customer that uses Netflix and Max quite a bit, and you realize you can save money on both if you bundle them together, but you can only bundle them if you’re a Verizon subscriber, the incentive to switch to or stay with Verizon is compelling. And it comes at a time when the wireless carriers have moved away from service contracts and locking phones down to keep a customer on a service. Those days are gone. But the bundle offers a compelling reason for a customer to stay. It really seems like a win for the streaming service, the wireless provider and the frugal customer.
Giles Tongue, Bango: Absolutely. In a report released by Bango over the past few weeks, we noted that customers feel overwhelmed by the sheer number of subscription options. Here at the TV of Tomorrow Show, we’ve encountered content providers that are producing streaming FAST (free, ad-supported television) content channels, while also maintaining subscription-based versions of their offerings. There are now a bazillion different ways customers can access the shows and movies they want to watch, and customers are really struggling to make sense of all the different business models and architectures.
If there is anything the service provider can do to improve the value of their product to the customer, that is going to help everyone in the service and content space. To that end, a number of content providers we’ve encountered have told us that when their service is bundled with one of their peers, there is a perceived value increase across both products, irrespective of the price. That’s especially true if you’re bundled with a headline product — think Netflix, Max, AMC Plus, Starz. If you’re able to get a bundle with a cornerstone product, your value increases with them — and that creates a stickier customer as well.
Many providers aren’t set up to offer those bundles on their own, usually from a technical standpoint, and they’re probably not going to do that through an app store where a large tech company takes a commission for itself. But you can do that through a content hub, and that’s where Bango comes in. We facilitate the technology and streamline the process so a company like Netflix and Warner Bros. Discovery can offer their streaming services as a bundle through a platform like Verizon Plus-Play, and at an attractive price. Service providers are unlikely to do that on their own through their own website, and they’re probably not going to do that through an app store.
I suspect that by offering a bundled product at $10 per month or some other value price point, they’re appealing to a section of the marketplace that neither service provider would be able to capture with a full priced product on their own.
The Desk: One of the most-attractive bundles offered through Verizon Plus-Play, and certainly one that makes it stand out from the rest, is the one where the ad-supported tiers of Netflix and Max are offered for $10 per month, which is $7 less than the total cost of both services purchased independently. That bundle comes at a really interesting time, too, when American streamers seems to be growing more comfortable with streaming ad-supported content if it means they can get access to that content for free or at a substantially reduced price compared to a premium, ad-free tier.
Giles Tongue, Bango: We have done a little bit of research on services that launch ad-supported tiers, and what we’ve found is that people are more upset when an ad-supported tier suddenly replaces an ad-free one, as opposed to when a service launches an ad-supported tier at a lower price than the ad-free one. I’m not going to name any names, I’m a consumer of those products, but I have found myself asking the question as to whether I want to pay an extra £3 per month to get rid of ads on a service that was previously ad-free.
The Desk: When converted into dollars, £3 per month is more expensive than what that unnamed service is charging to remove ads from their video product in the United States. It’s only $3 per month here.
Giles Tongue, Bango: Yeah. In our research, one third of people have said they’d be happy to come out of that ad-supported tier by paying £3 per month, or $3 per month here. And I think we’re seeing this interesting dynamic that has to do with customer expectation — the subscriber was paying a certain amount, and now an ad-funded tier appears. Some are cancelling, and some are willing to pay the extra cost to get rid of ads.
But I think that’s a different scenario where an ad-funded tier appears, and you’re not yet a subscriber of the service to begin with. Now, there’s an ad-funded option that is cheaper, and suddenly the service is within reach based on price. It hits on the perception of value of what that service has to offer.
Let’s say you’re a fan of “Stranger Things,” which is on Netflix. You watch the show, and now you’re thinking, well, should I continue my subscription? In the past, you had two options — pay for Netflix, or cancel it. But, now, you have a third option — you can downgrade to the ad-supported plan.
The underlying experience is one where the service offers the customer flexibility and choice. By giving consumers more flexibility and choices, I think there’s a benefit all around. I’m a marketer. I think that’s a serious topic that marketers need to become experts in. I think dropping an unexpected change on customers, like introducing ads into what was historically an ad-free service, and charging customers a premium to remove them, is not going to go down very well unless you manage it carefully.
The Desk: In terms of that specific service, there was some customer education in the form of press coverage and direct emails to members, so I don’t think the situation was a lack of outreach. It seems to me that the pushback from subscribers stemmed from the fact that the change was so unconventional when compared to how other services launched ad-supported tiers.
I’d like to shift back to your partnerships with telecoms. As we were speaking, one thing that popped into my mind is how telecoms tried to be operators of media and entertainment services. There was the infamous merger between AOL and Time Warner around the turn of the century, and then the merger of Time Warner and AT&T, and Verizon and Yahoo!, and it seems like when a telecom tries to buy its way into the media and entertainment space, it rarely works out for them. Other mergers and product launches, like AT&T’s merger with DirecTV and T-Mobile’s decision to launch a streaming cable-like service called TVision, also highlight the difficulties of running your own entertainment-based aggregation service.
A subscription marketplace that offers bundles of entertainment services seems to be the approach that works the best, especially when it is facilitated by a neutral party like Bango.
Giles Tongue, Bango: Well, what mobile operators and telcos are good at doing is providing a way for customers to pay their bills. They have existing customer relationships, and they’re great at customer service. So, telcos are able to handle all of that, and that is what makes them a great platform to sell subscription-based services and bundles…
The Desk: …and I think that’s why they believed, early on, they needed to acquire media and entertainment companies, and linear content distributors like satellite operators. Because media and entertainment products were seen as a way to draw and retain customers, but there were no platforms back then that did what Bango does today.
Giles Tongue, Bango: That’s right. Spot on. Historically, telcos would need their own technical implementation to get things going, if they wanted to offer an ancillary or complementary service independent of their own brand. That could take a year or longer to do, and if you wanted to offer two, three, four, five products, even longer, the idea of offering a subscription marketplace with 40-plus offerings, as Verizon does today with Plus-Play, was just out of reach for too many chief technical officers until recently. With Bango, it is now realistic.
To be clear, we’re not always involved in the commercial side of the deals between a telco and a subscription-based service. But we do provide the technology that enables them to make bundles and other commercial deals.
The Desk: So, Verizon goes to Netflix and says, we’re a Bango client and we want a relationship with you. And once they figure out the business end of whatever deal will materialize, Bango comes in and says, okay, from a technical standpoint, we can make all of this work, right?
Giles Tongue, Bango: Right. Our product is software-as-a-service, called the Digital Vending Machine. And we’ll go to the telcos and say, we have relationships with these services, if you pursue a deal with any of them, we can hook you up to our Digital Vending Machine which enables you to sell their product, and you can get to market quickly.
But the other way around is also true. A teleco can come to us and say, we want to offer a bundle of two streaming services at a certain price point. We can go to those service providers and say, this teleo wants to do this deal at this price point, and if you’re good with that, we can get you connected today and in the marketplace extremely fast.
If either party – the telco or content provider – want to later go back and renegotiate a different price or a deal with different bells and whistles, that’s fine with us. On their own, they could spend at least a year or more, trying to get a deal together, and then work on all the technical side that comes with it. But with us, since in many cases we already have the technical connections in place and in some cases commercial terms too, if they want to move quickly, ironing out those details could take a few weeks instead of a year or longer.
Our objective is simple: We want to get everyone moving as fast as we can. We’re trying to bring products and bundles to market as quickly as possible, and leverage that speed to quickly scale.
The Desk: Some of the deals that we’ve seen come together involve wholesale prices — T-Mobile pays a wholesale price to offer Netflix to customers, and Charter has done something similar with Spectrum TV offering complementary access to certain Disney streaming services based on a customer’s programming plan. Does that same wholesale arrangement hold true for the business arrangements facilitated through Bango?
Giles Tongue, Bango: In a general sense, it can. First, on a technical level, our product can handle any type of offer – duration, price, trial period, all variations. That means we can support any commercial terms. It can be a wholesale price, or it can be an à la carte price. We can facilitate both types of arrangements, or anything in-between. On the customer end, the same is true. We can enable it so customers purchase a subscription on an individual basis, or as a super bundle, or even get a service for free as part of their overall monthly plan.
I think that really comes into play as more services, particularly streaming services, start to promote their ad-supported tiers. I’m sure the content providers see ad-supported plans as a way to generate revenue off the same customer twice — from the subscription and again from the ads.
To be honest, there aren’t many streaming service providers who are sitting around believing life is groovy right now. Our research shows that one-third of them are struggling to make their direct-to-consumer business work. Then again, data from Omdia shows that 20 percent of all subscription video on-demand services are sold through telcos, and that figure is expected to rise to 50 percent over time. So, there is a real recognition by streaming services in particular that they need to acquire more customers and through telcos are a great way of doing that.
The Desk: We’ve talked a lot about how Bango helps telecoms, with a specific focus on wireless companies. But they’re certainly not the only company that could benefit from this relationship. Land-based broadband operators can, too, especially as more of them move away from offering traditional cable TV service. MyBundle, a company I’ve covered for several years, offers a white-label version of their platform tailored to those broadband companies. MyBundle seems like they would compete with Bango in that space, but MyBundle actually has a partnership with Bango where they can tap into your digital vending machine of subscription-based services. How did that come together? Did you approach them, or did they approach you?
Giles Tongue, Bango: It was just a lovely occasion where everything came together.
The Desk: …that’s it? You just happened to be in the same room one day, and…?
Giles Tongue, Bango: Yeah, actually. We spend a lot of time at conferences, like the one we’re at today. Jason (Cohen, MyBundle founder and CEO) and Scott (Barton, MyBundle’s Chief Product Officer), they’re great guys. We see them pretty regularly. They’re focused on the broadband side of the business with a specific emphasis on smaller and rural telcos. MyBundle is doing a great job helping those companies who, quite honestly, are going to struggle to build the kind of solution that MyBundle offers if they did it on their own.
Where we come in is, we have bigger scale, we have direct relationships with streaming services, we have the Digital Vending Machine. Some of our relationships might be different from what MyBundle has, but by plugging in to us, MyBundle can now offer those services to their smaller and rural broadband clients, and those broadband providers can point their customers to those services on the MyBundle platform.
We’re part of MyBundle’s approach to scaling up, and we’re helping them just as we help telcos scale up their business and bundle offerings.
The Desk: Are there opportunities beyond telecoms and broadband providers? I say that because we just recently had this earth-shattering deal where Walmart agreed to pay $2 billion for Verizon —
Giles Tongue, Bango: Vizio.
The Desk: Vizio. Yes. What did I say?
Giles Tongue, Bango: Verizon.
The Desk: Vizio. Yes — we’ve been talking about Verizon, so I guess I had them front and center in my brain.
So, Walmart agreed to pay $2 billion for Vizio, and it’s clear that their intention is to harness Vizio’s digital advertising business that they’ve built up over the last few years, right? Part of that deal also includes Vizio Connect, which is Vizio’s in-house streaming marketplace that operates like Amazon’s Prime Video Channels or The Roku Channel’s marketplace or MyBundle. And Walmart is one of those companies that thought they had to acquire a media and entertainment business — Vudu — to offer the benefits of that service to their customers. But that bet didn’t pan out.
As Walmart pushes forward with their own Prime-like membership service, Walmart Plus, I’m wondering if there are opportunities for a company like Bango to come in and say, we have a subscription bundling platform, we can connect you to these services in a way that makes Walmart Plus attractive, beyond what Vizio Connect might offer through that $2 billion deal.
Giles Tongue, Bango: Oh, definitely. So, we think about Walmart as a company with many different things going on. Walmart Plus is their subscription product, so that immediately fits into our warehouse. So one of the things we’d think about is, where are some of the places we can help Walmart Plus be sold? Well, Verizon Plus-Play would be an example of one such avenue that works.
The Desk: Verizon does offer Walmart Plus, correct?
Giles Tongue, Bango: Correct. In that context, we think of Walmart Plus similarly to a content provider. But Walmart could also be a subscription reseller. They’re in the business of selling stuff, so it makes total sense.
The Desk: Retail aside, what are some other companies that could be on either end of that equation?
Giles Tongue, Bango: Well, we go back to where we started, which is with mobile operator partnerships. So, businesses that are closely aligned to that — Internet service providers, connected TV and other telco-type businesses. They make perfect sense.
We’ve actually done surveys to see where customers might expect to find a bundling opportunity The number one answer was their telco — mobile operators, cable TV and broadband. The other answers? Retailers, banks and utility companies.
The Desk: So, a customer would be okay with getting Netflix from their electric company?
Giles Tongue, Bango: Well, think beyond Netflix. Maybe an electric company can offer a subscription to a home security system, like a smart doorbell?
I’m not saying Bango currently does this, but I’m saying we might in the future. Subscription potentials are numerous, and that is especially true with things that customers buy on a recurring basis. Bundling a home security system with an electric bill is just one way for customers to pay for two services through one bill that they’re already paying for separately. Why not join them together?
It works in other areas too. Insurance. Credit cards. I use a particular credit card when I travel overseas. Why not add travel insurance as a benefit to that credit card? In some cars, you can now get a subscription to activate a heated seat feature.
The Desk: You can even purchase unlimited dinner at chain restaurants like Applebee’s or the Never Ending Pasta Pass at Olive Garden during certain times of the year.
Giles Tongue, Bango: Well, I hadn’t heard of that last one — but how is that business going to acquire new customers for that perk? They’re going to have to spend a lot of money on advertising, or partner with a company that has millions of customers and tack that on as a promotion to whatever that company offers.
For newer businesses or services, that can be hard. But if you plug in to a partner through Bango, we offer a cost-effective way to reach new customers and scale up your product or service.
The Desk: So, Bango started its current mission with subscription video services, but it’s not limited to that product. What is the 30,000-foot view on where things with Bango are going?
Giles Tongue, Bango: Our mission is, literally, to manage half a billion subscriptions. Globally. That’s very open-ended. That could take shape in any number of ways. We’re agnostic about the partnerships on both ends — to us, it’s one company’s product or service being sold by another company. We bring those partnerships to the real world, and make those transactions happen.
We can go broad, or we can go niche. We can break down barriers. All that rich television and film content coming out of India? We can bring those services to telcos in the United States. We can do the same in Australia through Optus SubHub and through our partnership with EE in the UK. That helps us get to a half-billion global subscriptions.
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