Friday, January 11, 2019

Streaming Video Bundles are Coming

The whole point of multi-product bundling, for a supplier, is to sell more products, often at lower cost, while boosting consumer perceived value. The attraction for buyers might be a bit more complex.

Saving money or convenience typically are cited as the value of bundled product purchases. But higher value at lower cost is likely the key benefit, as consumers view bundles, so long as buyers also have the option of buying a la carte.

It always has seemed inevitable that streaming subscriptions would be bundled, or at least made easier to buy within a single account, creating new forms of subscription video products that somewhat mimic the older linear video bundles of channels.  

Roku and Amazon Prime are among the firms that have been enabling such discretionary purchases.

What has not yet occurred is the ability to functionally bundle Netlfix, Hulu and Amazon Prime in the same way that a Starz or HBO subscription can be added to an Amazon Prime or Roku account. But that is coming, many believe.

The point is that if video content is balkanized--each studio ecosystem in essence becoming a channel--many consumers are going to prefer a bundle of channels that includes several of the major studio ecosystems in one account.

Some might argue that the value of such multi-product purchases is convenience: having only one bill to deal with instead of multiple accounts and billing arrangements. Some believe that is an overstated value. The real value is savings.

That seems unlikely to happen at first, in part because profit margins are pretty thin in the streaming business, to begin with, and thinner still for distributor partners. Still, some research suggests sales volume increases when bunldes of complementary products are packaged together.

In the case of streaming services, success might hinge on whether Netflix, Amazon Prime, Hulu and other services are seen as complementary, or substitutes.  

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