The new TV streaming bundle—how media companies are marketing and growing their platforms

Streaming began as the anti-cable—a way to give consumers more control of the networks they purchase and streamline what had become bulging and costly TV packages. But now these digital platforms seem to have only added to the mess and, in the process, made it increasingly more challenging for media companies to market their programming and brands. While streaming platforms experienced a boom during the early stages of the pandemic, growth has stalled as churn accelerates. This has left TV networks—many of which introduced new or revamped streamers during the lockdowns—to rethink their bundling strategy in an effort to drive more value for consumers. Paramount has explored numerous bundles with retail memberships, owned assets and competitors, while others such as Verizon are creating bundles that package together competitive services. See our Year in Review stories here “The original sin of streaming was that [media companies] assumed customer lifetime value looked like cable, whereas it could be four out of the 12 months, it could be eight out of the 12 months, it really depends,” said Andrew Rosen, founder of media consultancy Parqor and author of “The Medium” newsletter. “In cable, people always needed a cable connection in order to consume cable—there’s nobody who really controls the point of access in streaming except for the streaming service,” and consumers have shown a preference for canceling and swapping streamers month-to-month. Experiments in bundling from the likes of Paramount, Disney, NBCUniversal and more look to solve the problems of volatility in subscription revenues, and the evolution of bundling could indicate the next phase of streaming TV distribution. Also: Paramount+ with Showtime blurs streaming-cable boundaries Bundle strategies Since the inception of Disney+, the Mouse House has packaged it with sibling streamers Hulu and ESPN+, but the media giant stopped short of blurring the lines between these services (in part because Hulu has only recently come fully in-house after Disney agreed to buy out Comcast’s share in the streamer). Now, Disney is starting to test incorporating much of Hulu content directly into the Disney+ app. The company is seeking to reduce churn rates and centralize its cross-platform content for consumers weary of exiting one app and loading the other by adding Hulu as a subsection of Disney+. The Disney+-Hulu integration, which was officially announced during Disney’s fourth-quarter report, is currently in its beta phase (Disney expects to launch it in full next March) and still requires users to subscribe to both platforms individually. The difference is that Disney is experimenting with how much engagement one app drives versus two and the type of content users who subscribe to both watch. “One of the things that Hulu on Disney+ is going to achieve is it’s going to increase engagement, which reduces churn,” wrote Joe Earley, president of direct-to-consumer at Disney, in a blog post. “When someone goes into Disney+ they have this enormous other world to access and I think that people are going to discover content they never even realized was on Hulu.” Brian Wieser, media analyst and founder of Madison and Wall consultancy, said media companies have shown “willful optimism” in the shift toward bundling, and that there was always logic to separating streamers per specialty, such as with Disney+ and Hulu. “The debate was what the optimal mix was: Do you have a little something for everyone in every single service, or do you have something that’s really concentrated on their needs,” said Wieser. “And the industry is still figuring this out … The variable that has to be considered is the price point.” Related: ISpot hires Disney exec as it grows sports measurement Consumers have become much more skeptical of increasing monthly payments than they once were, and Wieser said in order for bundling to catch on, which he suspects it won’t, streamers would have to offer larger discounts than they’re likely willing to. For media companies, “taking two $20 services and combining them for $40 won’t work” because subscribers would be more wary of a single high-cost fee than multiple smaller ones. And, the more a subscriber pays for a service, the less likely they are to tolerate advertising, said Wieser. Paramount is taking a similar approach to Disney. The company incorporated Showtime content into Paramount+ in late June and rebranded the platform Paramount+ with Showtime. Paramount+ can still be subscribed to separately, but they now exist on the same app and it prompts users to log in to the combined service for shows that require a Showtime subscription to access. “Once we integrated the value proposition of Showtime into the actual user interface [of Paramount+], the results were transformative,” said Jeff Shultz, chief strategy officer and chief business development officer at Paramount Streaming. “It absolutely changed the performance of that bundle, and so we bring that learning into our expectations for bundling with third-party partners.” Shultz called the key to partnerships “surface area,” which means a partner covers all ground with consumers including billing, communication and a correlation between each partners’ offered services. The missing ingredient prior to Showtime’s integration into Paramount+ was the streamer’s ability to communicate the bundle’s value to consumers. Paramount has struck bundle deals with utility services outside of entertainment, a way to potentially keep consumers who rely on those memberships for shopping and delivery subscribed longer. Paramount+ is an added perk with Walmart+ subscriptions, and AARP members get a 10% discount. Shultz said that Walmart easily checked two of his criteria—a well-established billing relationship with consumers and the retail service with delivery perks was seeking an entertainment add-on to remain competitive with Amazon. Where Walmart exceeded expectations was its ability to market Paramount+ to consumers. This included highlighting the streamer in its marketing to more unique opportunities such as parking lot screenings of “Top Gun: Maverick” and linking sales of “Paw Patrol” toys with the show on Paramount+. Although Shultz declined to share specific metrics for Paramount+’s partnership with Walmart+, he said that Paramount+ “sees comparable engagement from Walmart customers as we do with other customers” rather than the service being an afterthought in their Walmart+ subscription. Bundles: The Eras Tour Bundling eras might be divided by the pre-Disney-Charter deal and the post-Disney-Charter deal. Disney’s blackout on Charter’s Spectrum cable service led to the companies agreeing to take Disney-owned channels such as Freeform off the air in exchange for offering subscribers access to Disney’s streamers. Before Disney’s deal with Charter, streaming bundles were like BOGO sales. Subscribe to a phone service and get six months or a year of a streamer for free. It was part of a plan to get customers in the door at a time when Wall Street was measuring success by subscriber growth. Then Netflix lost 200,000 subscribers in a single quarter last year, setting off a reevaluation of what growth means in streaming, and how to solve the industry’s consumer retention issues. Related: A timeline of Netflix’s first year with ads Now the success metrics for streamers look a bit more nuanced. Yes, investors and advertisers want subscribers, but more valuable is the amount of time subscribers spend engaging with the service. Now, as churn rates grow and threaten the stability of streaming businesses, platform activity metrics such as monthly active users (MAU) and average revenue per user (ARPU) are shared in quarterly reports to express viability for advertisers, e.g. the difference between subscriptions and the number of people potentially watching an ad per household. The era that the Disney-Charter deal launched is one in which consumers have rejected media companies’ efforts to seek payment for models that don’t make sense—such as paying twice for content that airs both on Disney’s linear channels and streamers. And other media companies are taking note. NBCU’s president of content distribution, Matt Schnaars, told Ad Age that when it is time for the media company to re-up its deal with Charter, it will engage in similar talks to bundle Peacock for its cable subscribers. To be sure, Peacock does have existing deals with cable providers Comcast, Charter and DirecTV, offering discounted subscriptions or free trials to the latter two and a conditional bundle with parent company Comcast. Schnaars said these were created per the needs and audiences of each partner and are mutually beneficial. Hold on to your vat of chili. Now when you sign up for Instacart+, you get @peacock at no extra cost. 🦚🤝🛒 Start streaming and snacking now at https://t.co/qrXsopCoiB. Terms apply. pic.twitter.com/lOZoNPi6OS— Instacart (@Instacart) November 29, 2023 In some ways, media companies are attempting to make their streaming subscriptions compulsory and unmissable through bundles such as Paramount+’s with Walmart+ or Peacock being an added perk for Instacart+ subscribers. But these same companies are also beginning to bundle together in ways that harken back to traditional cable packages to make consumers’ subscription dollars cover more libraries. To solve for churn, media companies have begun to center “more metrics around engagement—which programs are really keeping viewers engaged rather than just a subscriber, and what kind of programming strategy is keeping consumers engaged,” said Erin McPherson, chief content officer, consumer group, Verizon. “This is where bundling comes in. In fact, I don’t think it’s outside the realm to see bundle partners programming in complementary ways,” and not just for streamers like Paramount+ with Showtime or Hulu on Disney+, but also competitors looking to grab new audiences by bundling together. See our 2023 Marketers of the Year here The Bundler This month, Verizon announced its mobile customers would be able to opt into a Netflix and Max combo for $10 per month. Through the same service, Verizon customers can add the Disney Bundle for an additional $10 per month. The two streamers’ ad tiers, as well as the basic plan for Disney’s trio bundle, would cost about $33 per month if purchased from each platform. The Netflix-Max bundle, and previously a similar bundle for Paramount+ with Showtime and Netflix through Verizon, could be a first step toward helping the industry solve its audience fragmentation problem, according to McPherson. Aggregators and bundlers such as Verizon and other connectivity providers, cable-like digital live TV services (vMVPDs) and platforms such as Amazon, Apple TV and YouTube, have made efforts to create a one-stop home for streaming viewers, centering discounted deals. For now, media companies are also showing renewed willingness to commingle assets as they did in distribution models past in a way that may lay the groundwork for consumers to begin thinking of streaming not as a collection of apps, but a mix-and-match ecosystem of its own. This is manifesting in a return to licensing content to competitors, such as a recent announcement that Disney will license 14 series, including “Home Improvement” and “Lost,” to Netflix after similar deals between Netflix and Warner Bros. Discovery. AMC Networks recently licensed numerous series to stream on Max, and noted in its third quarter report that the deal led to a notable bump for “Fear the Walking Dead,” “Anne Rice’s Interview with the Vampire” and “Anne Rice’s Mayfair Witches” on its owned AMC+ streamer, while its 2018 series “A Discovery of Witches” featured on Max’s Top 10 list for several weeks. Max is The One to Watch when you want even more. Your weekend watchlist just got longer with a selection of AMC+ handpicked favorites. pic.twitter.com/LP8NcQrq5V— Max (@StreamOnMax) August 28, 2023 “We thought ‘A Discovery of Witches’ had full penetration, scale and awareness, and we saw through the viewership engagement on Max that it really didn’t,” said Kim Kelleher, chief commercial officer at AMC Networks. “To us, that drove home the limitations of keeping your high-quality programming in a walled-garden environment or service, because unless you have massive scale, people may not know these excellent shows even exist.” Still, the blurring of lines between assets could be a delicate balance should it exacerbate consumer confusion. Recent announcements such as Showtime’s linear network airing Paramount+ originals and ABC airing reruns of Hulu’s “Only Murders in the Building,” could risk perpetuating the idea of having multiple bills for the same shows. McPherson said Verizon has taken a research-first approach to its bundles to consumers and selects partners based on both consumer wants as well as research from Verizon to solve streamers’ retention problems. Through add-on services available with its mobile plans, as well as Verizon’s vMVPD and subscription aggregation platform +Play, McPherson said Verizon can use data points to predict churn and consumer behavior. These insights include when consumers sign on, when they cancel and switch subscriptions and what’s the most engaging content. This opens doors for connectivity providers, which could be comparable to cable providers for traditional TV, to play the role of bundler in the future. But Verizon and other bundlers’ role isn’t selfless—it provides the bundler with higher per-user revenue as McPherson said the company takes a share of subscriptions created through Verizon, and additional discounted bundles create perks to be competitive with other connectivity companies. Bundle 2.0 McPherson predicts Verizon’s data-driven approach to bundling could open up possibilities for new ways of bundling streaming services. While she said bundling is in “the first inning,” McPherson also imagined a future where a company like Verizon might liaise between media companies to coordinate consumer-chosen bundles. For example, McPherson said a consumer might pay a fixed monthly rate for four streaming services, but can swap them out at the beginning of every month. If a favorite show is airing in January, but the consumer isn’t interested in a platform’s content beyond that show, then they would swap it for another service in February. In addition, media companies could continue growing their offering through add-ons such as live events, with McPherson pointing to the live broadcast of Taylor Swift’s Eras Tour or Beyoncé’s Renaissance Tour. Also read: Why Taylor Swift is a Marketer of the Year This type of bundle would be “affordable and solve a problem for programmers because they’re not seeing 30%-plus churn in and out,” said McPherson. “It solves a problem for the advertising industry because they’re able to make a buy into that bundle…and get that ad return in a much more certain way.” It could also allow streamers to up consumer engagement through content strategy based on the other competitor in the bundle—a hub on Netflix for viewers that just binged “Game of Thrones” on Max or the same on Max for fans of “Squid Game”—and for advertisers to buy media based on subscribers known to be tuning in on bundled services. McPherson’s prediction could be a solution to fears of what Paramount’s Shultz called “cable 2.0,” where consumers are forced into a single mega-bundle without the ability to “unbundle the bundle.” “As long as the components of a bundle remain discreetly available and discreetly priced, then the consumer can always unbundle the bundle,” said Shultz. This could lead to “the best of both worlds,” according to Shultz, because heavy TV consumers can subscribe to multi-service bundles at a discounted cost for more content, while more discerning viewers willing to put in the effort of managing multiple subscriptions can continue paying for individual platforms. And although media companies “participating in a multi-service bundle will be generating less revenue on a per-subscriber basis by virtue of a retail discount … they’re reaching incremental subscribers at lower cost and those subscribers are staying around for longer, reducing churn and increasing retention and lifetime value,” said Shultz. But by all accounts, a utopic streaming landscape of limitless customization and savings will be a hard battle to win. “The really difficult question that bundling faces is that it’s probably not going to solve the problem the way that it has in the past, and it has to look a bit more sophisticated and data-driven to really work,” said Rosen. “But even if that happens, then you need to see management changes, because there are executives who think that way and will be open to doing that, but they’re not currently running Warner Bros. Discovery, Paramount or NBCUniversal.”

The new TV streaming bundle—how media companies are marketing and growing their platforms

Featured Stories