As traditional pay TV continues to decline, media companies are gearing up for the streaming era with the rise of bundled services, potentially reshaping the industry landscape in 2024.
The Decline of Traditional Pay TV
The year 2022 has proven to be challenging for pay TV, as more consumers are choosing to cut the cord and move away from traditional cable services. Streaming platforms, on the other hand, have also faced their own set of challenges with subscriber declines, decreasing ad revenue, and persistent losses, despite Netflix’s dominance in the market.
The Emergence of Streaming Bundle
Amid these challenges, industry experts believe that 2024 could mark a significant shift as media companies are expected to embrace the concept of bundled services. The Cable bundle era is making way for a new type of bundle that could potentially provide a viable path forward for both streaming platforms and cable providers.
Key Players and Potential Deals
The Charter-Disney deal, as well as a potential merger discussion between Paramount and Warner Bros. Discovery, are indicative of the industry’s shift towards bundling. Mergers and acquisitions are also anticipated to drive the trend of bundling services, with the potential for more integration of streaming platforms into cable bundles.
Challenges and Opportunities
While the demand for streaming bundles is evident, top players in the industry have historically exhibited reluctance in pursuing such deals. The dilemma lies in the balance between average revenue per user (ARPU) and subscriber growth when offering services at discounted rates, as well as potential cannibalization of cable plans by streaming bundles.
Industry Movements and Implications
Streaming platforms have already made strategic moves, including Disney’s acquisition of Comcast’s stake in Hulu and the rollout of combined Disney+ and Hulu platform. Paramount Global and Apple are reportedly considering a bundle of Apple TV+ and Paramount+. The integration of streaming into the pay TV bundle is expected to provide upside for the industry, particularly in offsetting declining ad revenue for pay TV.
Challenges Faced by Streaming Platforms
While streaming platforms have also experienced subscriber losses, they have implemented strategies such as price changes and the introduction of ad-supported tiers to mitigate these challenges. Warner Bros. Discovery, for instance, has highlighted the disruption in the industry and the need to stabilize its streaming segment, despite witnessing significant losses initially.
Potential Impact on Key Players
The Disney-Charter deal has set a framework for cable companies to transition into the streaming era, potentially stabilizing subscriber trends. Media companies like Disney and Warner Bros. Discovery are viewed as having the most potential upside from the bundling trend, given the wide range of content in their services and the early bundling initiatives they have undertaken.