(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.)
As sometimes happens, I had hoped several news stories would close before this week’s issue.
The NBA’s new media deal terms? While heavily leaked, they still aren’t official. (I’m waiting for actual numbers to crunch before I opine on the deal. )
Paramount’s final fate? While rumors and leaks abound, this saga has actually gone on since last December without a resolution.
The revival of reward-based compensation in Hollywood? I read articles in Puck, Bloomberg and The Ankler reporting that the streamers want to change how they reward talent, but without knowing the actual changes, this remains “to be determined”.
But that’s fine! It’s been a month since my last official “most important story” column, so we have more than enough stories to cover, including the return of our friend, the bundle. But is it a bundle? That plus Netflix buying NFL Games, Roku buying MLB Games, two unlikely but potentially big lawsuits, a big Disney expansion, and more.
Most Important Story of the Week – These Bundles Matter…But They Aren’t Cable
Tis the season of bundles:
- Disney+ is adding an ESPN tile.
- Disney will sell a bundle with Max added to Disney+ and Hulu.
- Comcast announced a bundle with Peacock, Netflix and Apple TV+.
- Previously, Warner Bros Discovery, Fox and Disney announced a sports bundle now called Venu.
If 2023 was the year of the ad-tier, 2024 might be the year of the bundle. The hottest take I saw—in a few different places—after the plethora of bundle news was that we’re returning to the “cable bundle” of yore. (See Michael Schneider with a good piece.) Of course, then I saw a lot of counter-takes that, um, no these new bundles have nothing to compare to the cable bundle of old. (See Julia Alexander for a good one.)
Both takes are right. The cable bundle was a monolith powered by local cable monopolies. To have any TV, you had to have all of the TV. No churn allowed! These new bundles aren’t that. They will, though, take advantage of the power of bundling that cable TV benefited from.
So you know what? Let’s power rank these new bundles in order of “most bundle-y” (and hence likely to benefit their parent companies) to least. But first, let’s talk about why bundles are roaring back in favor as the latest marketing tactic to woo customers.
This Isn’t “Cable” Redux, But Bundles Can Still Help (Drive Value)
The streamers have been seduced by the siren song of bundling because they need to address two worrying business trends:
1. Decreasing rising churn. According to the little bits of subscription data we do see, churn rates seem elevated over previous time years. A bundle will, presumably, decrease churn since a customer is likely two cancel two streamers they watch than one streamer. (Though the key is “watch”.)
2. Reverse the stall in subscription growth. In a recent streaming ratings report, I linked to Parks and Associates reason survey showing that the average household subscribes to 6 streamers, and that number has stabilized over the last few years. Obviously bundles are a way to (semi-artificially) drive that number back up.
The power of the bundle is that, while prices are lower, they really can benefit customers. And if those customers sign up for more services or stick around for longer, the streamers benefit. For all the griping about the cable bundle at its peak, there’s just as much griping now about the lack of an easy-to-use, all-in bundle. And while a lot of customers do sign-up-and-churn, that’s complicated and most subscribers would rather sign up for a service and forget about it. A bundle makes that financial math a little bit easier.
Power Ranking the New Bundles
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