Re-Bundling Streaming Services

“There’s only two ways I know of to make money: bundling and unbundling.”

Jim Barksdale, Netscape CEO

There are so many streaming services out there to subscribe to now if you want to be able to watch everything. Netflix, HBO Max, Disney+, Discovery+, Paramount Plus, Peacock, Hulu, Amazon Prime Video, ESPN+, Apple TV+, and on and on. Cord cutting is no longer a way to save money, it’s an introduction to dozens of $9.99/month subscriptions.

I think an interesting aspect of this is how many of these providers have focused on keeping users inside their single app. Many of these apps have hubs for their different media brands inside a single main app. For instance, you can flip between Turner Classic Movies, the DC Universe, and Studio Ghibli all without leaving HBO Max. 

Disney offers this kind of in-app navigation as well, but interestingly they seem to be the only streaming company with a multi-app strategy. And because of that, Disney wants you to bundle.

They want you to bundle so much that the homepage of all three of their streaming properties make the bundle the main call to action.




On every homepage, the main button is ‘GET THE DISNEY BUNDLE.’ I also want to note where there is, and isn’t, cross-promotion within those homepages. Disney+ and ESPN+ both only feature content from their own portfolios. However, the Hulu homepage mixes in their exclusive content, such as Handmaid’s Tale, with streaming content also available on cable like FX’s Dave, with Disney content like Luca, and ESPN+ content like their UFC partnership

This is great bundle design. Not just because of the cost savings (which are 28-36% depending on whether you choose the Hulu No Ads version of the bundle), but because of the differentiation among the core audiences of each app.

A bundle works when it encourages distinct audiences to all buy the same product. If you’re a family with young kids, Disney+ is worth way more than $7.99/month to you, but maybe neither ESPN nor Hulu are worth their individual costs. Maybe those apps are worth more like $3/month to you. Or maybe ESPN is worth $6.99/month to you, but you don’t see any value in Hulu. In any of those situations, buying the $13.99/month bundle makes more sense.

Now reverse that scenario with a sports fanatic who wants more opportunity to watch live sports or an adult who wants to stream episodes of cable favorites plus exclusive dramas and you start to see the value. 

This is why the worst thing you can do in a bundle is combine similar properties. It doesn’t make any economic sense to combine ESPN+, and Bally Sports (née Fox Sports), and NBC Sports into an all-sports streaming subscription offered at a discount. You have huge customer overlap between those brands and are now just cutting revenue.

Instead, you want to take that person who would only pay $1 for your thing, and figure out how to make that transaction possible. In a world of streaming, where the variable cost of sending a stream to someone’s house is very low, but the variable cost of charging someone’s credit card for $1 is proportionally high, that’s easily done through a bundle. 

Of course, now I’ve just described the value proposition of cable TV. 

Same as it ever was.