Last week, Bango announced a platform deal with Verizon. But what is a platform deal and how does it differ from a subscription bundling deal?
A simple description of subscription bundling is the grouping together of subscription services in a single offer. For Bango, this is typically bundling a first-party service, like a mobile phone contract, with a third-party service, like Netflix. The opportunity for subscription bundling is significant and growing rapidly. Subscriptions for popular media services like Netflix, Disney+, Amazon Prime etc are expected to generate revenues of $129B in 2021 growing to $210B by 2026 . When you add on the many other types of subscription – music, gaming, health, lifestyle, security, productivity, among others – the opportunity is huge.
More and more businesses are looking to bundle their subscriptions with third party services because it acts as a differentiator at the point of sale and creates a more loyal customer base. These subscription bundles are popular with telcos, but now energy companies, financial services, retailers and other verticals are entering the market, offering third party bundles to attract and retain customers.
In the Bango business model, a platform deal arises when a payment provider, say a telco, wants to offer several subscription services to their customers. Rather than manage all these connections on an individual basis, it is far easier to deploy one platform, Bango, to manage all these connections. This gives rise to a platform deal.
Bango monetizes these platform deals in a different way to a vanilla subscription bundling deal. We charge a SaaS style fee which increases with greater usage of the platform, in capacity related chunks. Critically, in most cases, we continue to earn a percentage of the end user spend from the merchant, maximizing upside rewards. These are long term contracted deals which lock-in revenue earlier than simple revenue share deals, bring greater revenue visibility, and grow our recurring revenue streams. In addition, platform deals often add new merchant customers to the Bango Platform, benefitting all the other payment providers connected to Bango.
Platform deals are a strong testament to the power of the Bango Platform as a “joined up” technology that demonstrates the power of the Bango Virtuous Circle. They are also great business for Bango.