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Most of us in the United States are used to paying for subscription services from content providers in addition to our monthly cell phone service. Hulu, Netflix, Spotify, and so many others draw us in with their unlimited streaming offers that we justify spending the extra cash each month to use it. Unlimited data plans and service subscriptions are the norm in our society and something we’ve become accustomed to over time. Yet the subscription business model doesn’t succeed in developing countries. Many over-the-top (OTT) subscription services have a hard time reaching new customers in those emerging markets.

One key contributor is that the average citizen in those markets typically does not have a convenient way to make payments or even have direct access to a bank account. Credit or payment card penetration is low. While mobile payments have taken off in the last few years, many customers rely on prepaid cards or top-up mechanisms for purchases such as streaming and mobile services. An additional factor is that unlimited plans – especially data – are in most cases not economical in emerging markets and thus not available. This, combined with the difficulty to control the usage of OTT streaming services is an inhibitor to the adoption.
Therefore, the reality is that emerging markets have to be treated completely different than say, the United States. The tactics that work for a U.S. audience need to be reevaluated for an audience with entirely different economic realities.

Popular subscription services, like Netflix or Spotify, which offer a monthly plan are missing out on a large customer base merely because of the style of their service plan offering. A solution to this payment dilemma is a bundled service plan – offered by the operator. Subscription services can leverage mobile carriers as a way to reach new customers in emerging markets. This benefits the service provider, the end user, and the carrier in multiple ways.

Forget for a minute how you currently purchase subscription services and image this scenario; you purchase a service like Spotify Premium from your carrier instead of through Spotify itself. With one simple purchase, your carrier can combine that service with your data plan, all for one price. This eliminates multiple payments and allows customers to determine what they use their data for. For customers in emerging markets who typically rely on prepaid services, this gives them the opportunity to join Spotify and manage the payment directly through their carrier – also removing the burden for Spotify to market, find the customer base, and, most of all, use ineffective (and costly) alternative payment methods. This model goes beyond just Spotify. Bundling premium services with data plans makes it simple for end users. It also allows subscription services to tap into new markets they’ve yet been able to reach. For example, Spotify might find it easy to target a U.S. audience who is willing to pay $9.99 per month for Spotify Premium, but they need to reevaluate how they reach customers in Latin America.

For carriers, bundling services gives them an opportunity to innovate beyond offers such as voice, text, and data. This differentiation is becoming more crucial than ever, when carrier competition is fierce and network reliability is relatively the same across the board. Right now, carriers have the opportunity to change the way customers handle payments and become more than a commoditized service. They can choose to deliver a variety of new services or they can remain a generic data connection. Offering valuable services like subscription plans is especially important in emerging markets since it gives the end user more options and ease of use.

Carriers would do well to realize that customers want to be marketed to in a way that is targeted, fast, and ultimately makes their relationship with the brand seamless. The best way for carriers to do this is to recommend products and services directly to their mobile device that make sense for the user. That way, customers feel like the brand knows and understands their problems and can offer applicable solutions to improve their overall experience. In addition, the outreach from the brand to the customer happens instantaneously via mobile, so there is no lag time or frustration involved that would hinder the customer’s interaction with the brand. With this approach, customers can update their plan, for instance, the same way they would text back a friend - quickly, seamlessly, and, most importantly, contextually.

Initiatives, like Facebook’s Internet.org are already emerging as a way to bolster connectivity in developing regions. The need to appeal to developing markets is not lost on the tech leaders of Silicon Valley and beyond. The struggle is finding the best way to appeal to an audience of people with a socioeconomic system that does not mirror the more mature markets. By creating a marriage between services like Spotify and Netflix and mobile carriers, carriers are taking another step to expanding into new regions and offering access to the unconnected, offering a window into the connected world that makes up the rest of the planet. 

 

Robert Oberhofer is vice president of Technical Sales and Marketing at ItsOn, a company offering cloud-based service platform that enables operators to deliver dynamic service options to user devices.

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