If you thought that February was a great month—and based on my traffic, you did—well, I’ve got a very big March coming up for you.
Looking ahead, I can give you two heads up for what I’ll be writing about. Normally I don’t do this, since my writing process can fluctuate a bit week-to-week— some articles and research projects wind up taking way more time than I expect— but I’ve spent the last two weeks doing some fun data tasks and I think I can deliver.
First, I’m working on a series on “The Future of Film”, which is really code for “Should you release your films in theaters?” (Spoiler: yes.) Hopefully, this series (based around a new model!) will be ready in the middle of the month.
Second, I’ll be adding a new data source to my weekly Streaming Ratings Report, and we have a ton of insights to unpack there!
Before we get to those stories in March, let’s close out February with my take on the biggest stories “of the week”, including a fascinating strategy quandary…
Most Important Story of the Week - To Bundle or Not To Bundle?
Here’s a fun question:
Should the legacy media outlets have one streaming application/service, or a bundle of streamers?
It’s such a simple question, but devilishly hard to answer.
To call myself out a bit, I’ve sort of liked the idea of a “bundle” ever since Disney successfully launched their bundle back in 2019. I also speculated that Paramount was uniquely set up to launch a bundle too. (And they later started and ended a “bundle” with Apple TV+.) And again, after the Warner Bros Discovery merger, I thought they might launch a bundle too.
So I like the idea of bundles!
Clearly, though, most studios/streamers do NOT agree with Disney. In recent years, it seemed like most of the studios seemed to be moving to only one streamer. Even WBD announced that Discovery+ would be folded into HBO Max. Disney has been the subject of constant rumors that they may (or should) sell either ESPN or Hulu, which would naturally end their bundle!
So the bundle is dead and buried. Time to move on...but then I I saw this news:
And that’s a good reminder that the question “To bundle or not to bundle?” is still an open one. Too often, we love to settle into “one size fits all” strategic solutions, and this issue is a good example of how that thinking is probably too limited.
So let’s talk about “bundles” and why they may (or may not) be making a comeback.
Four Rules on Bundles
The question is “Why do some bundles work and others don’t?” Thinking about it, I came up with four general rules.
1. First, you need three services/streamers to make a bundle work. Otherwise, you’re really just pairing three different services, and “pairing” doesn’t sound as good as bundle. But with only two services, it’s much more likely customers buy streamers a la carte, or not at all.
2. Second, one application, in general, is better than two. This is because it makes a customers' lives easier. Instead of having to open multiple applications to see what to watch, they just open the one and start scrolling. Indeed, Netflix’s biggest advantage remains that they are most cord-cutters’ default streamer.
3. The proliferation of advertising and FASTs makes bundling more difficult. Since FASTs are free, you’re not “bundling” anything there. And adding advertising makes the bundle pricing much more complicated.
4. Brand identity matters. The stronger the brand, the more likely customers will pay for it.
With those rules in mind, let’s evaluate a few recent news stories, that both show the strengths and weaknesses of various “bundles”.
Warner Bros Discovery Will Keep Discovery+ After They Expand HBO Max
The biggest problem for Warner Bros Discovery is that they never really had a third leg to add to their “bundle” tripod. They probably could have, if AT&T had kept HBO distinct and made a Warner Bros streamer instead of launching HBO Max, then they could have offered three services under one roof. A Warner Bros streamer could have even included CNN before CNN+ or maybe sports from TNT. But since they didn’t have that third option, they really only ended up with two viable streamers.1
Without that, though, WBD just doesn’t have the juice for a bundle. And as they’ve likely seen, the customers paying $5 for Discovery+ probably don’t really want HBO’s content, or they’d already have it. Thus keeping the two streamers separate likely maximizes revenue. (And we know how important that is.) The leak that WBD will likely keep Discovery+ around also shows how pricing factors into the decision to bundle or not.
(Bonus story: I stumbled across a story about Discovery+ stopping their linear feeds—basically the equivalent of FAST channels—on Discovery+. I’ve long advocated for linear feeds on all the streamers, but those digital linear feeds could come with residual and other fees, which means they do have some associated costs. But if the FASTs can make the economics work, I have to believe the streamers can figure out them too.)
Paramount+ and Showtime Will Merge
I casually mentioned this story last issue, but it’s worth pointing out that Paramount Global is moving away from any bundling/pairing. Indeed, they had a “bundle” with Apple TV+ a few years back, but they cancelled that deal when the rebranded to Paramount+.
In this case, Paramount+ likely knew that the “Showtime” brand doesn’t hold up outside the linear, Pay TV realm. And they don’t quite have enough content to stand up another streamer either. So in this case the “one app to make customers lives easiest” makes sense. With all of CBS, Viacom, Paramount+, and Showtime content, that’s a pretty good library.
Disney & The Hulu Debate
The biggest question swirling Disney CEO Bob Iger is obviously whether or not he’ll keep Hulu. He muddied the waters even further a few weeks back when he repeated that he (and by extension Disney) would be open to selling Hulu. Hard to have a bundle if one-third of that bundle disappears! Last week he seemed to go further, noting Disney would consider exiting the “general entertainment” business, since it’s hard to be “differentiated".
Hulu is the “general entertainment” part of the bundle!
All in all, it’s a fascinating debate about positioning. On the one hand, I understand Iger’s desire to focus on what Disney is great in, especially what he built, which is a house of legendary brands. Of course, in streaming, having a “go to” app is also great, and Hulu clearly is that for a portion of customers. (Or all of this is moot, and he’s just trying to strengthen his negotiating position with Comcast.)
So for all that talk, the most important “action” of the last few weeks is that Hulu has extended their deal with Fox to keep day-after-air television. So even if Disney may get out of “general entertainment”, they know Hulu needs it. Frankly, I think Disney’s bundle is working, and I wouldn’t stop it if I were them.