Big media companies are teaming up with rivals to offer bundled subscriptions as a way to reduce churn and differentiate their offerings to consumers.
One of the standout trends in the TV streaming industry in recent months has been the return of the bundle. Rather than concentrate solely on their individual offerings, some of the biggest names in the media space have joined up with allied companies and even former rivals to offer consumers an all-in-one package of entertainment choices.
In the US market, activity has been particularly strong. Verizon has introduced a streaming bundle consisting of Netflix and Max, while Comcast’s just launched Xfinity StreamSaver consists of Netflix Standard with ads, Peacock Premium and Apple TV+, thus allowing for savings of over 30% (or nearly $100) a year to customers.
Interestingly, it is not just service providers that offer newly formed bundles. Disney+, Hulu, and Max have teamed up to offer their own bundle directly to consumers. The service is not named yet, and there is no pricing information, but it launches this summer in both ad-supported and ad-free versions and includes a stellar list of premium entertainment brands, including ABC, CNN, DC, Discovery, Disney, Food Network, FX, HBO, HGTV, Hulu, Marvel, Pixar, Searchlight, Warner Bros., and more.
Bundling is, of course, not new. It is a strategy that defined the cable era and, as Bloomberg wrote in How Cable Companies Learned to Love Netflix (or Hulu) and Chill Out all the way back in 2017, also helped bridge from cable to the streaming age by combining the two services together. However, the recent momentum behind it, especially in the influential US market, is of a new scale entirely.
Addressing viewer fatigue
One of the main issues that the new wave of bundling is addressing is subscription fatigue. This has become a factor as the number of streaming services that the average consumer subscribes to has risen because of increased fragmentation in the market.
As a result, churn has also increased. In the US, for instance, where the amount of available streaming services is probably the largest in the world, over 50% of households reported canceling at least one streaming service in late 2023 as a consequence of the economic downturn.
The partnerships between companies that the new wave of bundling exemplify are ways to hedge against that. With consumers evermore willing to hop between services as specific shows start and end, having more content available under a single umbrella is a way to try and increase the odds that you will be able to offer them something of interest. As sports content becomes an increasing component of streaming offerings, the importance of this only increases, as seasons start and finish to a fixed rhythm.
There are other benefits as well. As long as the sign-in process is a smooth one, customer onboarding becomes more seamless and cost-effective, brand awareness and market reach are boosted, and there is even the prospect of leveraging the buying power of the combined bundled entity when it comes to securing rights for external content.
Of course, not all bundles are created equal and there are different levels of integration available. Arguably the most powerful, and certainly the one we are seeing the most interest in from telcos and others, is super aggregation. This does not require substantial investment in bespoke technology as the ability to integrate all the services can be offloaded to a third party. This not only makes it cost-effective, but the super-aggregated bundle addresses some of the main issues of fragmentation from the consumer point of view such as being able to offer unified billing and holistic content search and discovery. From the service provider viewpoint, it also enables cross-service analytics so they can understand the entirety of their services and dramatically reduces time to market.
Consumers are looking for more than just video
What is interesting is a look at what comes next. Bundles need to offer more than simply video according to the latest Battle Royale - Wave 5 study from Hub Entertainment Research. Its central thesis is that television is no longer the centre point of household entertainment, especially amongst younger viewers.
Consumers in general use just as many non-video entertainment providers (social video, streaming music, gaming subscriptions, podcasts, audiobooks etc.) as they do premium video, an average of 6.6 compared to video’s 6.3. For the under 35s that figure leans even more to the non-video sources, 9.1 versus 7.4.
To measure the effects of this, Hub conducted a survey where 3000 interviewees of all ages were given 16 different services and asked to choose a Top 5. The table is below. Among the streaming platforms, only Netflix made it into the Top 5 ideal bundles, with high-speed internet being the priority service selected by 71% of respondents.
This has some interesting implications. Previously, media and entertainment services were delivered by entirely separate companies, apps, and methodologies. They were consumed differently as well. However, we are rapidly closing in on a point where they can all be offered by the same company and consumed on the same devices. Netflix is one that has been expanding into gaming in recent years, and it would be no surprise to see more of the truly large and established aggregators start to cross content categories to further reach consumers.
Of course, there will be a balance that will be required here. One of the reasons why the streaming era was so successful in the first place, was that consumers had become resistant to the cable-era bundle, as this had got bloated with too many channels that they felt they didn’t need. If anything, what we are seeing now is the return of the skinny bundle that first emerged in 2015 with the launch of Sling TV: a base package with a number of add-ons that can be selected and discarded on a monthly basis, from new services to ad-free tiers, pay-per-view content, and more.
Getting that base price right is going to be the key to success in the next generation of bundle packages, even before they start adding more services. Will the 30% saving offered by Xfinity StreamSaver be enough, or will they demand more? It will be interesting to watch how the new bundles perform as well as how they evolve to meet changing consumer demand. But no doubt, the key message is that the future of TV streaming very much lies in partnerships.
