The Resurgence of TV Bundles in the Streaming Age

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After investing billions of dollars to introduce their own direct-to-consumer streaming platforms, the largest entertainment companies in the world are starting to join forces again. They are offering consumers a reprieve from rising prices by encouraging them to switch to their more profitable ad-supported tiers, in the hopes that these more appealing deals will prevent them from canceling their subscriptions.

This week, Verizon unveiled a new streaming subscription for its wireless phone customers. It offers a combination of Netflix and Max's ad-supported tiers for just $10 a month, providing a savings of over 40% compared to the individual prices. For an additional $10, Verizon will also include Disney+, Hulu, and ESPN+. This means that for just $20 a month, the company's customers can now access five streaming services for the cost of a single Netflix tier.

Verizon announced that it is leveraging its key partnerships with major players in the content industry to deliver greater value to its wireless customers. This follows recent reports that Apple and Paramount are in talks to team up and offer a discounted combination of their streaming services, Apple TV+ and Paramount+, in an effort to gain traction in the competitive streaming market.

Disney has combined its three streaming services, Disney+, Hulu, and ESPN+, into a bundled package at a reduced price. Additionally, it is launching a combined Disney+ and Hulu app that will merge the libraries of the two platforms. Disney chief Bob Iger stated that this move is a logical progression of their direct-to-consumer offerings, providing more opportunities for advertisers and giving subscribers access to more streamlined and robust content.

Squinting closely, the television bundle that was once a necessary entertainment choice is now overwhelmed with niche channels and high prices, leading consumers to cut the cord. David Zaslav, CEO of Warner Bros. Discovery, CNN's parent company, believes that the bundle will make a comeback in the streaming era, as the current fragmented app-based experience for consumers is far from ideal.

Warner Bros. Discovery's Max platform is essentially a combination of previously smaller services, merging HBO Max with the Discovery+ portfolio. Over recent months, Max has introduced a new 24/7 live news channel from CNN and incorporated a live sports tier, two significant features that were previously exclusive to cable lineups.

The cost of streaming services has significantly increased this year, prompting consumers to pay higher monthly fees on major platforms. Netflix's most expensive tier, which features ad-free programming and 4K-resolution, now costs $22.99 a month, while a similar tier on Max is priced at $19.99 a month. In an attempt to reduce the cost of streaming services, bundling multiple services together could be advantageous for consumers, as well as for entertainment companies hoping to retain subscribers amidst an increase in cancellations. Antenna, a research firm, reported that cancellations of streaming services reached an all-time high of 5.7% in October, reflecting the consequence of the direct-to-consumer content age.

Streamers are looking to minimize cancellations by offering larger content libraries at a discount on ad-supported tiers. Some consumers currently subscribe to multiple services to binge watch specific shows, then cancel their subscriptions. Media companies must act to address this issue.

As Zaslav stated at a conference in May, the current independent, walled-off models are not sustainable because they do not provide a good consumer experience and are causing significant financial losses for many businesses in the industry.