The age-old concept of bundling is returning triumphantly, promising consumers more value for their monthly subscription fees.
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The latest player to enter this arena is telecom giant Verizon, offering irresistible bundles that could reshape how audiences consume content. As traditional cable companies like Comcast announce price hikes, the streaming world responds with innovative solutions, creating a shift in the industry.
Save a bundle on streaming?
Verizon's announcement of a $10 bundle for ad-supported plans from both Netflix and Warner Bros. Discovery's Max is a strategic move to entice its myPlan customers. This reflects the ongoing streaming wars and mirrors the cable TV bundle of the past, providing more than 40% in savings for subscribers.
However, Verizon goes even further, introducing a comprehensive $20 bundle that includes the ad-free Disney+ plan alongside the ad-supported tiers of Hulu, ESPN+, Netflix, and Max. This bold move is set to begin on Thursday and emphasizes Verizon's commitment to customer retention through the power of bundling.
Verizon CEO Hans Vestberg, speaking at a UBS media conference, highlighted the positive impact of bundling on customer retention, attributing it to the flexibility and savings to customers. The company's enthusiasm for bundling extends beyond the current offerings, with plans to explore new bundles in the future. This echoes a broader trend in the streaming industry, where partnerships and collaborations are becoming increasingly prevalent.
Streaming giants band together
The trend of bundling is not entirely new, with companies like Apple offering Apple One, a bundle that combines Apple TV+ with other services like Apple Music and Apple Arcade. Disney has also joined the fray, officially rolling out a one-app experience that integrates Hulu content via Disney+, following in the footsteps of Paramount's Showtime combination and the merger of HBO Max and Discovery+ earlier this year.
The collaboration between distribution players and content operators makes the current bundling wave unique. Paramount Global and Apple are reportedly in early talks to bundle their streaming services at a discount, signaling a shift in how companies approach partnerships. Mark Boidman, Partner and Global Head of Media at Solomon Partners emphasizes the importance of creating proprietary bundles that resonate with consumers. As streaming services multiply, bundling becomes a strategic tool to retain subscribers, preventing cable companies' revenue loss in a competitive market.
The allure of bundling lies in its potential to boost subscriber growth, particularly as users seek attractive, flexible deals. Consumers are actively looking for these types of bundles, and Verizon's move to bring together diverse streaming platforms at a reasonable price reflects a keen understanding of market dynamics. This approach is not only customer-centric but also aligns with the evolving preferences of audiences who value the convenience of having their favorite services packaged together.
It might not last forever
However, as bundling gains momentum, experts predict potential challenges for media companies still striving for streaming profitability. Marc DeBevoise, CEO of streaming tech company Brightcove, notes that while bundling can reduce churn and enhance customer retention, it might also lead to a decline in average revenue per user (ARPU) due to promotional-driven pricing.
As the streaming industry navigates these challenges, bundling could be a precursor to mergers and acquisitions (M&A), signaling a convergence of services to achieve sustainable profitability.
In contrast to the streaming world's innovative approach to bundling, traditional cable companies like Comcast are taking a different route. Comcast recently announced price hikes for TV, internet, and home protection services, with increases across the board.
As cable networks demand higher fees, these costs are passed on to consumers, leading to higher monthly bills. While this move has sparked criticism, it underscores the contrasting paths of traditional cable and streaming services, especially if you're looking to save more money.
Additionally, critics of packaged bundles claim the further streaming companies move to collaborate on offers, the more they begin to resemble traditional cable companies. The argument is that if a bundle bundles itself up enough, sooner or later, your TV menu will start looking like a somewhat familiar list of TV channels.
The resurgence of bundling in the streaming landscape marks a significant shift in how audiences access content. As Verizon and other players offer enticing bundles, the industry is witnessing a renaissance emphasizing collaboration, flexibility, and customer satisfaction.
While cable companies raise prices, streaming services explore innovative ways to deliver value, setting the stage for a dynamic and competitive future in the entertainment world. Where these competing giants land remains unseen, but it will be interesting to see whether these strategies end us right back where we started — a remote and a long list of channels.
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