Comcast recently announced they will be offering customers a bundled streaming package combining Peacock, Netflix, and Apple TV+. This offering is just the latest attempt by media giants to grapple with a major challenge: achieving sustainable profitability in the fiercely competitive streaming wars.

While bundling offers consumers a more affordable option (as many are spending more than they were with cable) and potentially reduces churn (subscribers who cancel), it's a symptom of a larger problem that was created by the very system these companies built.

The Problem: Content Cannibalization and Churn

These days, the streaming landscape is highly saturated with content as well as providers. With countless services vying for viewers' attention, each platform is struggling to differentiate itself and grab consumer attention. This has led to "content cannibalization," where companies spend billions acquiring exclusive content, only to see its impact diminished by the sheer volume of options available elsewhere.

Deloitte's Digital Media Trends report highlights this, stating US consumers subscribe to an average of four streaming services, spending a hefty $61 per month. Yet, "serial churners" remain a major problem, even for top platforms like Netflix.

Bundling: A Double-Edged Sword

Disney is ahead of the trend, having offered a bundle for Disney+, Hulu, and ESPN on one platform. Other providers are now taking note and we're seeing a rise in partnerships between competitors, such as Warner Bros. Discovery and Disney teaming up for a bundle with Disney+, Hulu, and Max.

While bundling is attractive to subscribers as it comes with a lower price tag and a one-stop shop for content, it still raises some questions:

• Reduced Choice: Does it limit viewers' ability to choose specific services they truly value?
• Price War: Will bundling lead to a race to the bottom in terms of pricing, further squeezing profits?
• Long-Term Sustainability: Can bundles address the fundamental issue of content fatigue and audience retention?

Other Options

Bundling very well may be the answer for these streaming giants but there are other key things to note that could offer solutions:

• Focus on Quality over Quantity: Investing in high-quality, exclusive content that differentiates a platform and fosters subscriber loyalty.
• Freemium Models: Offering free, ad-supported tiers alongside premium subscriptions to attract a wider audience.
• Targeted Content Acquisition: Moving away from the "all you can eat" model and strategically acquiring content that resonates with a specific audience segment.

The Future of Streaming

The streaming industry needs to innovate beyond just bundling. By focusing on quality content, exploring smarter content acquisition strategies, and potentially implementing hybrid models, streaming giants have the potential to break the cycle of churn and carve out a sustainable path to profitability.

This will require a shift in mindset and a willingness to experiment. If not, the current model built on a mountain of content and an army of "serial churners" might ultimately lead to a streaming bubble burst.

The post Entertainment’s Streaming Giant’s Big Problem: Can Bundling Save Them? first appeared on Smallcaps Daily.