Bundle or Bust? Benefits of Bundling Streaming Services in a Crowded Content Market
With rumors of a great rebundling in the streaming marketplace swirling around the media and entertainment world for the last year or more, how can bundling or aggregating their offerings help streaming services contend with the myriad challenges of today’s saturated streaming content market, from improving recommendations to user acquisition, content consumption, performance, marketing efficiencies, and confronting the seasonality of certain types of content?
Plex Head of Partner Management Josh Rosenblatt, Fubo EVP/Head of Marketing Yale Wang, and industry analysts Paul Erickson and Jon Giegengack discuss the potential benefits, pitfalls, and strategic intricacies of the bundling boom in this clip from Streaming Media Connect 2024.
Integrating Diverse Content Sources
Prompted by Erickson to discuss where global streaming platform Plex sees bundling’s benefits, Rosenblatt explains how Plex’s strategy of integrating diverse content sources, including transactional content and social components, has broadened their market insights and user base.
“We're a relatively young company in the content space,” says Rosenblatt. “We’ve been licensing content for maybe four and a half years. But the strategy was always to bring something that was broader than just the content that we would potentially license for AVOD or FAST or what have you. With that, we've been able to expand to transactional content to the Discover portal, which allows us to provide that discovery to Netflix and to Disney and all those things. The Watchlist, the social component, is called Discover Together, and it does really amazing things with regard to data. We're able to see usage across content we've licensed, but we're also able to track across movies in their theatrical window shows that are exclusive to Disney or other platforms. That allows us to really have a broader view on what's happening in the marketplace, to know users better, and to be able to customize and market and merchandise things better to two different audiences. It also helps with content acquisition at times. So I think for us, the benefit is just that it allows us to widen our net and bring in more information and more users to help us just broaden the portfolio and just our overall insights.”
Managing Seasonal Content
“Let’s look at the seasonality of content,” Erickson says, referring to sports and TV series that come and go in limited cycles throughout the year and cause many subscribers to churn when new games or episodes are no longer available. With these “different pieces of high value content,” he says, “you usually see a lot of subscriber acquisition, then a fall-off after the season ends. How can the industry leverage bundling effectively to combat the retention issues that are presented by this very high-value, popular seasonal content?”
Giegengack says it’s all about devising strategies to keep viewers engaged and reducing, as much as possible, the number of subscribers who say, “I left because I ran out of things to watch.”
Not surprisingly, usability and quantity of content are critical to curtailing churn, and bundling is often the easiest and most cost-efficient way to expand a service’s offerings. “Bundling helps the standalone platforms, which are really robust, but they’re still not as big as Netflix. There are still lots of notable buzzworthy shows that, just by the law of averages, are going to show up on some other platform. So the more that you can combine those together,” he continues, the easier it is to “reach a critical mass where fewer people are going to say, 'This isn't worth it anymore.' But the big caveat there is that it’s not enough to mush all that stuff together. You have to do it in a way that is still easy for those people to use and not just as hard as using those three platforms or four platforms independently.”
Given its sports-intensive focus, the seasonality of sports is something Fubo takes very seriously in its content strategy, particularly when it comes to entering into bundling deals, according to Yale Wang. "One of the things that we've spent a lot of time thinking about is what are the different LTVs [customer lifetime values] of the various plans and bundles and add-ons that we have, and how do we increase the LTV? And that's a function of both retention and margin. So when we are looking to add different add-ons,” he continues, “we can tell pretty much if this is going to extend somebody's lifecycle after, for example, the NFL season. I think everybody in the paid TV industry knows that there's this feast or famine type of dynamic. Whenever the NFL comes back and college football comes back, everybody wants their subs. But then once we get to Q1, there's going to be a churn event that happens if we can't get those folks to watch other stuff.”
That’s where bundling comes in, as the question then becomes, “Can we bundle in different add-ons—for example,something like an NBA League Pass—to transition that user’s engagement so that while there's a proliferation of entertainment options, that they still stay within the ecosystem and now they're watching another sport. Potentially there’s additional margin opportunities there, but ultimately it's extending the lifecycle and the LTV of that user. As a marketer, that gives me a little bit more leeway to have a slightly higher customer acquisition cost because now I can go after somebody that's going to be a little bit more profitable.”
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