To bundle or not to bundle
S07E01: Game of Streams (To bundle or not to bundle)
Our Media Solution Specialist, Magnus Svensson, is sharing his reflections on the online streaming industry in this post. This is part of a monthly series so make sure to follow us here if you do not want to miss an episode.
Jim Barksdale, the former CEO of Netscape, said that the only way to make money is by bundling and unbundling. This might be more accurate than ever in the world of television and streaming.
Cord-cutting continues to accelerate, for example, Comcast lost 440 000 cable TV subscribers during the last quarter as consumers continue to cut their traditional TV bundles in favor of streaming services. The main reason for keeping your traditional TV subscription is sports. According to Nielsen data, 94 of the top 100 most-watched TV programs in the US last year were sporting events.
With sports moving to streaming services, the days of the traditional TV channel bundles are counted. The declining cable TV business also reflects on the Regional Sports Networks (RSN) and the latest sign is Sinclair that is preparing the Diamond Sports Group (DSG), which operates the 21 Bally Sports regional sports networks (RSNs) and Direct To Consumer (DTC) service, for bankruptcy.
But what is the alternative? Some leagues explore the DTC path but keep at least one toe in the traditional distribution world in the markets where this is economic beneficially. A pure DTC service for an individual league or sport has proven hard to become profitable. One example is when WWE struck a deal with Peacock in January to move the WWE Network onto the NBCU platform. Even 1.5 million WWE subscribers weren’t enough to sustain a stand-alone service.
On the other side, we have the Warner Bros Discovery-owned Global Cycling Network (GCN) and its GCN+ service as an example of how single-sport subscription streaming products can be successful. At the same time, WBD closed the stand-alone Golf TV OTT platform and folded the sports into the broader Discovery offering together with other sports and entertainment.
Sports Streaming Bundles
Some sports rights move to streaming services such as Amazon Prime Video, Apple TV, and YouTube TV. Other examples are DAZN or Viaplay which acquire rights to several sports and leagues to enter new markets or to gain market share.
The big tech companies Amazon, Apple, and Google have other drivers to acquire sports rights and are less dependent on return on investment. But companies and services that only rely on revenue from subscriptions or advertising connected to the streaming service must find ways to monetize the expensive distribution deals. The solution is in most cases bundles, expensive bundles.
But how big and expensive bundles will the viewers tolerate? Will the soccer fan pay for a bundle with motorsports, golf, and boxing just to see their favorite team play during a limited period of the year? Could smaller packages that bundle several leagues within the same sport be the compromise?
If the price of sports continues to increase, the pirates with illegal alternatives will knock harder on the door. Even if I believe that it is worth paying a premium for premium sports, there are limits. And the only way to fight the pirates is to create a better experience the legal way.
To bundle or not to bundle, that is the question. With that said, I think that we have seen the peak of what the consumer is willing to pay for sports on television.
To watch out for the coming months…
Mergers and acquisitions between entertainment services are inevitable. For some time, I have used the analogy with a shopping mall where the entertainment services must keep the viewers engaged for as long and often as possible. With this in mind, a very interesting merger would be between Netflix and Spotify. The two service offerings would complement each other very well and create a great “shopping mall” of entertainment.
I’m not sure that this will ever happen or is even possible, but it would make a great bundle.
Magnus Svensson is a Media Solution Specialist and partner at Eyevinn Technology. Eyevinn Technology is the leading independent consulting company specializing in video technology and media distribution.
Follow me on Twitter (@svensson00) and LinkedIn for regular updates and news.
