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Is Bundling Streaming’s New Jet Pack?

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For decades cable TV service providers offered their customers the choice of various channel packages since not many users wanted to pay for the content they didn’t watch. Today, when each major video publisher has its own subscription-based streaming platform, often with unique content under its hood, users scratch their heads seeing monthly payments sometimes reach triple digits. Bundling is the obvious way for viewers to spend less to satisfy their growing appetite for content. As for streaming networks, some anticipate higher subscriber churn of the post-COVID times, and thus look for new competitive strategies to adopt.

Unpacking bundles

Ampere analysis points out that bundling has become the top growing trend within the streaming industry. As mentioned above, bundles are there to benefit both parties. From the user’s perspective, they improve the economics of the subscription experience, let people trial new services without paying anything straightaway and help with subscription fatigue. From the brand’s standpoint, bundles retain existing audiences and engage new ones to join, while also providing publishers with access to more first-hand customer-related data.

There are three main types of bundling in the streaming space:

Content bundling. This relates to content packages. They can consist of VOD (video on demand) + live TV offers, like YouTube TV or Hulu + live TV that stream major broadcast and cable networks to one’s devices.

Cross-platform bundling. Normally this includes multiple types of subscriptions such as music + VOD, or cellular plan + free VOD access. For instance, with the Verizon Unlimited deal, users get Disney+, Discovery+, and Apple Arcade/Google Play Pass for six months.

Ecosystem bundling. As big tech companies own various services, they eagerly pack them up into bundle offers with a whole bunch of perks inside. Perfect examples are Apple One, which combines multiple Apple subscriptions and Amazon Prime with free shipping, movies, books, and other features.

It’s hardly surprising these multi-brand collaborations drive millions of consumers to switch their subscription preferences.

Why bundle?

Brands aspiring to dominate every market niche they enter, such as Apple, Amazon, or Hulu, see bundling as a great strategy to stand out in their competitive crowd. On top of that, subscriptions are a source of first-party user data which, inter alia, contains names, emails, and other identifiers, voluntarily shared by consumers. This information can later be used for precise ad targeting, especially amidst cookie-less advertising trends.

Another reason this approach thrives is so-called “invisible payments.” Bundled deals are often purchased only for one specific service. Amazon Prime, for instance, is mainly purchased for its free shipping, while the included services can be left untapped though their price is still there in the package.

Free-bundled bait can also be used to drive device sales. Apple, for example, provides free annual access to their Apple TV+ streaming service for each Apple device purchased. These devices, in turn, encourage users to fit into the company’s subscription ecosystem. The recently announced Apple One distributes Apple Music, Apple Arcade, iCloud storage space, Apple TV+, Apple Fitness+, and Apple News+ package for $29.99 a month.

Is it a panacea?

With all its benefits, it might seem bundling is a go-to solution for every SVOD (subscription video on demand) provider out there. Naturally, this is not the case. One of the disadvantages of this approach is that it requires not only cooperation but also precise coordination between partners. Finding the right reliable ally takes resources and time.

Also, not every cooperation drives increased subscription sales, but every bundled sale can make less profit than the regular one. Hence, it’s a matter of discussion which way to tilt marketing efforts: partnering or the classic standalone promotion approach.

Small streaming services and niche channels will likely have nothing to gain from such partnerships since it is only possible and logical to deal with the brands from a similar league. Just like Disney does by giving consumers interested in its streaming services the option to access Disney+ with Hulu and ESPN+ for just $13.99 per month.

If the league is poor, then the results are likely to be too. The same reasoning keeps industry leaders, such as Netflix, away from bundling since it isn’t in their best interest to settle for less income.

In sum, it is rather a question of time and relevant financial reports to tell whether and when bundling is the right approach. For now, the trend seems to be gaining traction as more media and tech giants, who are not keen on leaning towards AVOD (ad-supported video on demand), join the Connected TV party. If this goes the way it is going now, the industry might have a radically different approach to SVOD marketing, when the whole constellation of services will form “mega-bundles” with everything their target audience needs.

[Editor's note: This is a contributed article from TheViewPoint. Streaming Media accepts vendor bylines based solely on their value to our readers.]

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