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STREAMING KILLED THE TV STAR

Is it time for television to get rebundled?

A man walks in front of the Disney+ logo
Reuters/Brendan McDermid
Disney is already starting to bundle its streaming services.
  • Scott Nover
By Scott Nover

Emerging tech reporter

Published

The streaming wars ushered in a new era of on-demand entertainment. At first the appeal was price. Why pay for cable when you could get a Netflix plan or a Hulu account for a fraction of the cost? Then came the content—a tsunami of original, high-quality programming that was its own selling point.

Suddenly, streaming was no longer just for cord-cutters. And cord-cutting was no longer the bargain it once was. A four-person household today might pay $20 a month for Netflix (prices are rising though), plus $13 for Hulu without ads. They might spend another $8 a month on Disney+, getting access to the Disney, Pixar, and Marvel collections, plus more to watch a favorite TV series on NBC’s Peacock or the former ViacomCBS’s Paramount+.

In short, being a committed fan of TV and film has become an expensive, decentralized mess. It makes the once careful arrangement of TV networks paying to be part of a larger entertainment bundle on cable look like a smart idea rather than a system to disrupt—which is why the industry’s next big shift will reverse the Great Unbundling.

Already, some rebundling is happening. Disney, which owns Disney+, ESPN+, and a controlling share in Hulu, lets you bundle all three services for $14 a month, or $20 a month with no ads, or $70 a month if you throw in Hulu’s live TV service. And more industry consolidation will likely beget more bundling options from the major streamers.

So, how long can the traditional cable bundle really last? Will consumers get a better deal from Hollywood studios? And will we see consolidation among the biggest names in streaming? We asked some of the leading television industry analysts what they think.

Will the traditional cable and satellite bundle ever truly die?

Geetha Ranganathan, Bloomberg Intelligence: “No we don’t think so. While we will continue to see cord-cutting and some people abandon traditional TV packages for streaming, we think there is still tremendous value in the TV bundle anchored by live sports and news. We think there will eventually be a floor of around 50 million to 55 million users who will still subscribe to a bundle, versus 105 million users seven or eight  years ago.”

Mike Proulx, Forrester: “There will come a time where all TV is streaming ‘TV’ and along with that will be various packages, deals, and configurations to try to mitigate cost pressures. And it’s already been happening, i.e. Disney’s ESPN, Hulu, and Disney+ bundle, which costs less per month now, given Netflix’s price hike. As the streaming wars intensify, ‘value’ becomes a critical play in providers’ strategy. In December, a Forrester survey found that 43% of US adults who use a streaming service are concerned with how much they’re paying for all of the streaming services they subscribe to.”

Ross Benes, Insider Intelligence: “Probably not totally, given how skinny bundles like Sling TV or Hulu + Live TV are clinging to it. But it will continually become less relevant.”

Tim Mulligan, MIDiA Research: “It will become a niche proposition for older demographics willing to pay for premium niche services focused on sports and news.”

It seems every media conglomerate has a streaming play these days. Is a rebundling of entertainment services inevitable? Or are we already seeing this?

Mulligan: “Yes, rebundling is inevitable. We describe the current landscape as the balkanization of video. Consumers who have recently migrated from traditional pay-TV find multiple services, user experiences, and billing relationships problematic and more demanding than the previous unified relationship. Early moves in the Great Re-aggregation are the direct-to-consumer  services like HBO Max, Peacock, and Paramount+.”

Benes: “The pace at which new streamers come out will slow down, but it isn’t inevitable that they will be rebundled.”

Ranganathan: “Yes, media companies are now being evaluated on how well they are transitioning from the legacy world of linear TV to a direct-to-consumer streaming world—i.e. they are judged by the number of streaming subscribers they have. I believe we are already seeing the rebundling in a way, [with the] Discovery/HBO pending merger, ViacomCBS and Comcast collaborating to launch SkyShowtime in Europe, etc.”

Do you think we’re going to see more corporate consolidation between streamers? Are there any obvious sellers in the current marketplace?

Benes: “I expect some consolidation. I expect more consolidation to happen within companies than between companies. ViacomCBS has Showtime, BET+, Paramount+. Pluto TV, and more. Consumers would be more inclined to use some of these services if they combined.”

Ranganathan: “Yes, consolidation seems inevitable at least for some of the smaller players like Lionsgate and AMC Networks. Streaming is all about scale so it will be hard for sub-scale companies to survive.”

What streaming services have the best chance of survival?

Benes: “Netflix, Disney+, Prime Video.”

Mulligan: “HBO Max, Peacock, Paramount+ for the aforementioned reasons. Disney+, Amazon Prime, and Apple TV+ are all disruption-proof because of their parent companies’ diversified revenue streams.”

Ranganathan: “We think there will eventually be a shakeout with Disney+ and Netflix at the top, followed by the Discovery/HBO combination and Amazon Prime as the top-tier players. Peacock and Paramount+ have room to grow but we are not sure that they can break into a major-player status.”

Proulx: “Data from a recent Forrester survey show the most popular streaming services that are used at least monthly in the US are Netflix (59%), Amazon Prime Video (43%), Disney+ (29%), and Hulu (26%). However, other platforms like HBO Max are making gains because of strong intellectual property. Relatively speaking, the streaming space is still very nascent and it’s anyone’s and everyone’s game right now.”

The price of a few streaming services can easily be equivalent in price to cable, and Netflix just raised its prices. Are consumers getting a good deal from Hollywood right now?

Benes: “Few consumers pay more for streaming than they do for cable. Many people have access to a lot more streaming services than they pay for due to piracy and password-sharing. The bang for the buck in streaming is much better. There is nothing in pay-TV that will get you as much good content as Netflix for $15 a month or Disney+ for under $10 a month.”

Mulligan: “Netflix took on debt at historically low interest rates to effectively educate digital consumers into paying less for more. … As the market now moves into consolidation and as interest rates rise, subscription prices will inevitably follow.

Ranganathan: “In the end, users will realize that cable is pretty good value but so much good content has already shifted to streaming. Most consumers may need to have a basic TV package to get access to sports while also adding on a couple of streaming services.”

What do you personally pay for?

Benes: “I get most of my streaming access by using my friends’ and families’ accounts. The only things I pay for are HBO Max and Hulu, which I get discounted through a Spotify deal from several years ago.”

Ranganathan: “Netflix, Disney+, Amazon Prime, Hulu, and Peacock, which is free to me as a Comcast customer.”

What has the proliferation of different streaming services done for content? Would content get worse or better if subscription services became more consolidated?

Benes: “It has made content harder to find. The rights deals for external content are confusing and hardly any consumers understand why old Jurassic Park movies have changed streaming services a dozen times over the last few years. For non-original shows, it is random where they will appear, and to normal people there is no reason behind the madness. Content would be easier to find with more consolidation, but more consolidation would mean less competition, which would allow streaming services to get away with awful programming.”

Mulligan: “Streaming has empowered show runners to such an extent that there has been a talent drain from traditional TV and film to the deep pockets, global audiences, and ad-free viewing distribution realities of streaming commissioning deals. This has resulted in an unprecedented increase in quality, original scripted drama and film. However, to sustain this dramatic acceleration in content commissioning, there has to be a rationalization of the business model towards sustained profitability, which is achievable through increased pricing and consolidation of services.”

Ranganathan: “I think the content has gotten better. At the end of the day, content is the differentiator, and streaming services have to make big bets and take wild swings to find their next big hit. I think the content would get better with consolidation, but ultimately consolidation is about improving economics for the companies while helping them round out their portfolio with different types of content.”

Proulx: “Unique IP is what differentiates one streaming platform from another. And it’s the quality of originals that help keep consumers subscribed.”

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