The streaming industry is undergoing a transformation, reverting to strategies reminiscent of traditional cable TV. As viewers grapple with multiple subscriptions, streaming services are experimenting with new tactics like bundling and introducing advertisements to retain subscribers.
The Rise of Bundling in Streaming
In an effort to simplify the streaming experience, companies are now offering bundled services. For instance, Spectrum recently included a basic Disney+ plan in its premium TV subscription, while Verizon is offering a package that combines Netflix and HBO Max for its cell-plan customers at a discounted rate. Even tech giant Apple and Paramount are reportedly exploring a bundle deal, potentially offering shows like "Ted Lasso" and "Yellowstone" under one subscription.
The Trend of Cancellation and Cost-Cutting
This shift comes as consumers express frustration over managing and affording multiple streaming services. A significant portion of US households subscribes to platforms like Netflix, Amazon Prime, or Hulu, but many are cutting back, with nearly a quarter cancelling three or more subscriptions in the past two years.
Ads Creep into Streaming
Another notable shift is the introduction of ad-supported tiers in streaming services. Companies like Disney+ and Netflix, which previously eschewed ads, launched cheaper ad-inclusive plans in 2022. This trend is not just about offering lower prices to consumers; it's also a strategic move to boost profit margins.
The Upcoming Shift to Ad-Free Premiums
The introduction of ads in platforms like Amazon Prime Video, with a fee to remain ad-free, signals a significant change in the streaming landscape. This strategy nudges users towards ad-supported tiers while maintaining profitability.
The Takeaway: The Stickiness of Bundles
Bundling makes it harder for consumers to cancel subscriptions, as these packages often include essential services like cell or cable. A recent EY survey showed that nearly half of Americans are interested in streaming bundles. Such packages encourage more content consumption, as evidenced by Paramount's experience with its Showtime partnership.
A New Era for Streaming
The streaming industry is mirroring traditional cable's tactics, marking a pivotal shift in how content is consumed and monetized. Bundles and ad-supported models are becoming the norm, potentially making 2023 the year of the streaming bundle. This evolution reflects the industry's adaptation to consumer preferences and economic pressures.
- Capital Alchemy