Prepaid Digital Content

Stellr Group

Stellr’s businesses are no #1 in their markets through first mover advantage.

Stellr’s initial expansion plans are currently into Africa, Bangladesh, and Sri Lanka.

The prepaid digital content business enables consumers to conveniently access prepaid digital content from the world’s leading content brands, such as iTunes, Microsoft, Google Play, and Netflix. These are sourced through a large and broad distribution network comprising physical stores and digital channels (network). The prepaid mediums for digital content are through retail point of sale cards and pin on receipt, as well as digital codes sourced through banking apps and other ecommerce channels.

Business Model

Companies can also secure prepaid digital content to reward their customers and staff. Customer loyalty programs are very prevalent and significant, and loyalty points can be redeemed by customers for prepaid digital content.

Given the importance of the mobile networks and banks diversifying their services, bundling is becoming an increasingly significant opportunity for Stellr. For example, in South Africa the leading mobile network operator, Vodacom, is the biggest reseller of laptops, and Stellr South Africa’s software products are mostly bundled with their laptops.

A key strategy for Stellr is to integrate into mobile networks and banking apps. Both channels have an enormous footprint, and the digital delivery of prepaid digital content is the most inexpensive medium. Mobile networks also have an extensive digital and physical footprint, which positions them as key network partners to expedite low-cost entry to develop network presence in new markets.

The market size for prepaid digital content in developed markets is estimated at $770 billion. These are predominantly gifting markets as credit card penetration and online payment methods is very high, and prepaid digital content can be secured directly online.

In developing markets, which are cash-based or where credit card/alternative payment options are low, consumption of prepaid digital content is mainly for self-consumption. This is where gifting is seen as a long tail opportunity.

Stellr has a consistent focus on content innovation, which is substantially improving the quality of the businesses and its scope. Such content attracts higher gross margins. For example:

• Digitizing physical distribution, moving from box to digital, has been successfully implemented for Microsoft and other software brands in both Stellr South and Stellr India; and
• Leveraging the network as a new distribution channel for traditional products and services, such as insurance products in Stellr India.

By leveraging its prepaid digital content relationships and the capabilities of Stellr Global, Stellr is also focused on smaller developed markets. In this regard, Stellr has already launched a joint venture in Israel, Stellr Israel, where the local partner is mainly responsible for developing the network.

The most valuable and strategic aspect of the business model is the network. The reason for this is that any form of prepaid digital content (product or service) can be processed through the network. This unique feature is a key driver of content innovation.

In the countries in which Stellr currently operates, it has currently established a network of more than 10 000 physical stores, 176 digital channels and a prepaid digital content suite of 54 leading global and local brands.

The prepaid digital content business model was originally established in South Africa in 2011, affording Stellr a wealth of experience in running and operating these businesses.