SMALL CHAPTER IDEA: Bango is tackling subscription fatigue

Why should everything be subscription based these days?

From entertainment, fitness, food and wine to beauty products and even underwear, it seems like the days of buying things when necessary are gone.

Instead, we must all subscribe to monthly home deliveries of goods and services that even the most demanding people will find impossible to track.

It may be an exaggeration, but there is no denying that the subscription-based payment model has invaded almost every facet of daily life.

According to Paul Larbey, executive director of bangoPeople generally admit to having between four and six subscriptions at a time.

“I suspect they actually have many more if they took the time to count them, but people admit it,” he said. “And its management is increasingly complex.”

Bango’s research shows that 36 percent of the 5,000 people surveyed pay for a subscription they never use and 69 percent want to be able to pay for multiple subscriptions on one monthly bill.

Enter Bango’s digital vending machine.

Bango’s digital vending machine (DVM) platform is designed to optimize this increasing complexity in digital subscription management.

DVM allows users to manage multiple subscriptions in one place, simplifying the process and helping them keep track of their expenses.

It’s a piece of business-to-business technology with a clear use case in the telecommunications sector, although financial services institutions also see appeal in Bango’s products.

On the one hand there are content providers (Ubers, Netflix and Amazon Primes), and on the other, resellers, telecommunications companies and banks that bundle these subscriptions into products to gain customers.

Bango sits in the middle, brokering connections between both parties and licensing its technology to resellers.

In Larbey’s words: “It is at the heart of the growing number of services available for subscriptions, on the one hand, and of channels through which those subscriptions can be delivered, on the other.”

This bundle, or “super bundle,” as Larbey calls it, creates deeper relationships with customers by offering unique content combinations and deeper discounts.

For businesses, this helps reduce customer churn while adding value to their services.

This, according to Larbey, creates a win-win situation for everyone involved: ‘Content providers have access to new customers. They are getting higher LTV customers because video subscriptions sold through a channel are much tighter than those sold directly with a credit card.

‘Abandonment is much lower for the content provider and for the reseller. They also benefit from being able to differentiate their own first-party services with interesting third-party offers that keep consumers in their environment for longer, creating a very close relationship.

‘And clearly, if you buy four or five subscriptions from your telco partner, switching telco partners becomes more difficult. Therefore, it reduces attrition.”

With very little overhead, Bango has a high margin business at a gross level with DVM. In fact, it often exceeds 95 percent.

The biggest challenge for Bango is corralling this revenue growth to the bottom line.

Research and development costs are the largest operating expense, resulting in an operating loss of £4 million against £24 million of revenue in the first half of 2024.

Operating losses are expected to decline as DVM adoption grows, and it is increasing. Annual recurring revenue increased 130 percent in the first half of 2024 and 77 percent throughout 2023.

Despite growth in 2023, Bango’s share price took a hit when results were released in January. The acquisition of payments platform DOCOMO Digital had higher-than-expected integration costs that overshadowed an otherwise strong year.

Bango added 33 new content providers to its DVM selection in 2023 and nine new resellers, followed by 13 new content providers (including Disney+) in the first half of 2024 and four new resellers, including a major Brazilian bank.

The latter underlines a key area of ​​growth for Bango.

“There are many similarities between telecommunications and financial services,” Larbey said. ‘They both have a basic service that they are trying to differentiate and they are trying to differentiate it by putting third-party services next to it, that is, content.

‘Both have a relationship of trust with the consumer. Both can bill the consumer and can market to that consumer. So in some ways, financial services are a lot like telcos, making them a great next phase for the packet market.”

Larbey added that there are additional opportunities for banks to use subscriptions to increase sales of premium bank accounts.

Ultimately, Bango’s DVM platform is useful for any service provider offering subscription packages.

Do you want to personally manage dozens of subscriptions at once? Surely not.