Subscription providers test new distribution models as consumer shopping behavior evolves

Subscription services are moving beyond app stores and direct sales channels to reach customers through telecommunications companies, retailers and banks.

The shift comes as consumers have become more strategic about where they purchase subscriptions, comparing prices across multiple platforms before committing. This behavior has prompted providers to add features such as pause and resume functions alongside retention offers that appear when users attempt to cancel.

“You might get that product through your mobile plan. You might even see something on your retail receipt, you know, when you’ve been to the grocers, some kind of discount,” said Giles Tongue, vice president of marketing at Bango. “So you can get different pricing. Sometimes you can get it for free. Sometimes you’ll get different durations.”

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Competing services bundle together

Services that previously competed are now forming partnerships. Netflix and Max sell together through Verizon for $10. Disney, Hulu and Max have created another bundle. Bango calls these arrangements “multi-party bundling.”

“You’ve got two companies, which a couple of years ago we’d probably have never even thought of working together,” Tongue said. “Now they’re quite happy to, and they come together as one price point and are sold together as one product, effectively.”

Fox One has deployed what Tongue described as multiple distribution channels. The service sells directly to consumers, bundles with ESPN and distributes through Amazon, LG TV, Roku and Verizon. Companies with multiple subscription products, such as Apple and Google, have packaged their services into single offerings like Apple One.

Retailers and banks explore subscription sales

A partnership between Netflix and InBev could expand subscription sales in grocery stores. Netflix spends approximately $2.7 billion annually on marketing, and Tongue suggested promotional displays featuring properties such as “Stranger Things” could appear alongside InBev products in retail stores.

“I think the Netflix InBev deal is really interesting because there you’ve got a massive brand in Netflix, which, by the way, spends in the region of 2.7 billion a year on marketing activities,” Tongue said. “Joining up with InBev, who are one of the biggest marketers as well, and with Netflix, you’ve got some really iconic, strong properties.”

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Walmart Plus currently includes Paramount Plus or Peacock in its membership. The Netflix-InBev partnership could prompt other retailers to sell subscriptions directly rather than limiting them to loyalty programs.

Digital banks are adding subscriptions to their service tiers. Revolut includes subscription products at higher membership levels. Research from Bango found that 48% of consumers aged 18 to 34 would switch banks if subscription bundles were part of the offer.

The logic mirrors what has happened with internet service providers, according to Tongue.

“When you consider tying in subscription products, we’ve seen this in ISPs, for example. The more subscription services that you add to the core service, the more loyal you become to that core service,” he said. “And it follows that banks will do the same.”

Some banks have added tools that identify subscription charges and ask customers whether they want to maintain those services. These interfaces could also surface new subscription options.

Content access creates friction

Multiple subscription channels can make content difficult to locate.

Tongue described an experience where his children watched Paramount Plus content through Amazon Prime until it stopped appearing in Amazon’s interface, prompting him to subscribe directly to Paramount Plus.

“There is a point at which this comes back to content curation and user interface and experience and so forth,” he said. “At some point, the consumer needs to be able to access the content that they’re subscribing to easily.”

Providers prefer to control their own interfaces and customer data rather than share access with platform partners. This creates a tension as bundles proliferate. There may be limits to how many services can be packaged together before consumers feel they are paying for content they do not use.

“There is a kind of ceiling to the multi-service bundle, I think, that we’ll probably hit,” Tongue said. “How does Netflix add a bit of Spotify and maybe some content creators and other things and keep adding to the price until it gets to a point where actually that price and all the things in it of which I’m using some percentage, 70% of, at what point does that become an imbalance?”

Smaller providers may benefit from bundling with higher-loyalty services. Sony chose to sell its content library to other platforms rather than operate its own streaming service, with the exception of Crunchyroll, illustrating the different strategies providers are weighing.

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