This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe
Wednesday, January 6, 2021
Hide your credit card, because yet another streaming service is coming for your wallet. The new Discovery+ (DISC) platform has 55,000 episodes of shows from networks ranging from the eponymous Discovery Channel to Animal Planet, Food Network, and HGTV.
It’s sure to please folks looking for comfort viewing, or who are really into true crime shows. But more importantly, it points to a trend that could upend streaming: bundling channels to save consumers cash and needless frustration.
Let me give you a glimpse into my own streaming lifestyle. I’m subscribed to seven services: Netflix (NFLX), Hulu, Amazon Prime Video (AMZN), Funimation, Disney+ (DIS), YouTube TV (GOOG, GOOGL), and Apple TV+ (AAPL). That adds up to nearly $122 a month. YouTube TV is the biggest cost at $64.99 per month, but it lets me watch the Mets lose from my home in Queens, New York, so I’ll take it.
A Comcast (CMCSA) subscription for 140 channels, meanwhile, costs about $101 a month in Queens including broadcast and regional sports fees.
With so many disparate streaming platforms offering their own “must-watch” content, the very over-the-top services that were supposed to supplant the excessive channels and pricing of cable are now just as bad. And that is where bundling comes in — or rather “the great re-bundling,” as NPD Connected Intelligence Executive Director John Buffone refers to it.
“One of the things that we are looking at is the potential for re-bundling down the road,” Buffone said. “To date, re-bundling largely benefits viewers by providing a single billing relationship, user interface, and discounts.”
If it sounds like cable, don’t worry. Because the whole point of this transition is to give consumers choices and save them money — two things cable was never known for.
Streaming is too expensive
According to the NPD Group, an online survey published in December of more than 5,000 U.S. consumers found users access an average of seven paid or free streaming services. That’s up from five such services in April.
If you enjoy international content, you might subscribe to a channel like Acorn for $4.99 per month or MHz for $7.99. If you’re a horror fan, you’ll need to jump on Shudder for $4.75 per month. And if you’re looking for original programming from broadcast networks, you might sign up for CBS All Access (VIAC) for $5.99 per month with commercials, $9.99 without.
And while those services certainly have content viewers enjoy, they each offer disparate user interfaces and different billing options. And when combined with subscriptions for platforms like Netflix and Prime Video, they can put a serious dent in your wallet.
“There is growing frustration in trying to navigate the flood of streaming options, all while trying to manage costs,” according to Deloitte’s Digital Media Trends survey released in June.
Deloitte surveyed 2,103 U.S. consumers from December 2019 to January 2020, finding the increase in “streaming fatigue” could spur cancellations. What’s more, pre-COVID, 40% of millennials said they were “overwhelmed” by their number of subscription services, and 43% intended to reduce them.
NPD, meanwhile, found paid streaming subscribers are increasingly canceling their subscriptions or using services less often if they can’t find the content they want. And the numbers are stark. While 14% of NPD survey respondents say they were canceling subscriptions for lack of content in April, 21% said they were doing the same in October.
As Buffone explains, the “great re-bundling” would ideally provide users with content through a single interface — allowing them to pay for it using one billing system and receive discounts for accepting multiple channels. Sort of like, well, cable.
And companies are already catching on. Amazon, Apple, and Roku (ROKU) allow consumers to buy individual channels through their platforms that they can pay for through a set billing option and view using a single interface.
“From a consumer standpoint it’s a slam dunk,” Parks Associates research director Steve Nason told Yahoo Finance. “Because of the plethora of services out there people have tons of choice, but with that comes tons of confusion, tons of tension, tons of time wasted trying to find the kind of content they want to watch.”
But not every company is on board with bundling services.
HBO Max is available on Roku, but you can’t sign up via Roku’s premium channel option. The same goes for HBO Max on Amazon Prime.
As far as individual platforms, Discovery+ combines shows from a whopping nine Discovery channels for $4.99 per month, or $6.99 per month without ads.
Disney, meanwhile, offers its own bundling option that combines Hulu with commercials, ESPN+, and Disney+ for $12.99 per month. Alone, you’d pay $5.99 per month for ESPN+, $6.99 per month for Disney+, and $5.99 per month for Hulu with ads, for a total of $18.97. That’s a decent discount. And later this month Disney will offer the same bundle with Hulu without commercials for $18.99 per month. Without a bundle that would cost $24.97 per month.
The problem is the ever-expanding universe of streaming options and the kinds of content they each offer. Netflix, for instance, was once home to movies from the Marvel Cinematic Universe and “The Office.” Now to get your “Avengers” fix and see Michael Scott, you need to subscribe to Disney+ and NBC’s Peacock, as well.
While marquee streaming platforms are unlikely to disappear, smaller brands could increasingly struggle to retain viewers without bundling options. And bundling means consumers could still get the content they want, with less frustration and a lower price. That’ll be an easy sell.