4-6 Stream Wars: The Rebundling Begins

Briefing for Tuesday, October 11th. I'm Zoe Thomas for The Wall Street Journal. These days, the number of TV streaming services can seem endless: Netflix, Hulu, Disney+, Apple TV+, and on and on. And now, adding to those choices are bundle options—packages of multiple streaming or other services offered for one monthly fee. If it sounds familiar, that could be because the platforms are taking a page out of the playbook of the old cable bundles, but with a few key differences. Here to discuss those and why streaming giants are taking this route is our Deputy Media Editor, Jessica Toonkel. Hi, Jessica, thanks for joining me. [ 00:49 ]

So, to start off, why are platforms deciding to offer these bundles? You're seeing a few things happen here, but one of them is that over the past three years, all of the major entertainment companies have launched streaming services. So it started with Netflix and you had Hulu, then Apple TV+, you have HBO Max, you have Paramount+, you have Peacock—everyone has come to market with these streaming services. And now they have to really grow, so they're looking to partner up as a way to get customers quickly. [ 01:21 ]

Can you describe what some of these bundles look like? The bundles are kind of coming in different variations, right? So you have the mobile phone operators like a T-Mobile or Verizon that are offering their own bundles. So for example, if you're a subscriber of T-Mobile, you can get Netflix for free as well as Apple TV+ and Paramount+ for one year. Then you have kind of these retailers that are also starting to get into the bundle game. So Walmart has a program called Walmart+, which is the equivalent to Amazon Prime, is what they're trying to be. And Walmart recently announced a deal, which we broke, with Paramount+. So if you are a member of Walmart+, you now can get the ad version of Paramount+ for free for being a member. So those are the retailers getting into it. We've also heard that Costco has started to look into doing something similar. And then you have the tech companies that are doing it. So Amazon is known for its Amazon Prime Video Channels. So if you go to Amazon Prime Video Channels, you'll see you can access any app on one app. And the next step of that is they're also looking at offering pricing bundles, which means maybe you could get two streaming services at a discount than you would get them if you bought them separately. [ 02:44 ]

You mentioned, you know, phone services, retailers, tech companies that are all offering these bundles. I guess, you know, is that what makes it different from the old cable bundles that we're maybe a little more familiar with? I think that the thing about the cable bundle is that you were talking about over 100 channels, right? I mean, easily, for well over a hundred dollars a month. And people didn't like it because they were paying a lot of money for a lot of things that they weren't watching. Right now, these bundles are trying to be a little bit more targeted, more specific. They're not trying to be everything for everyone. They're trying to be like, "Hey, I'm Disney, ESPN+, and Hulu." That's one example of a bundle that you have. You have stuff for kids, you have stuff for the whole family with grown-ups, and you have sports. So they're trying to be more targeted and specific and not trying to be all things to all people. [ 03:36 ]

Financially, how is that shaking out for the streaming platforms? These are pretty complex deals to come about. First of all, the platform pays the streaming service. So for example, Walmart pays Paramount+ two to three dollars per subscriber that actually activates their service. So you have to really make sure that each partner is invested in what they're doing, right? Like, you can't just sign a deal and hope everything goes well. The Walmart-Paramount+ deal, we reported, it took over a year to negotiate. Each company came in with what their marketing agenda would be, what it would look like. Walmart is marketing it in its stores. If you go in, you see, you know, "Paw Patrol" and "Top Gun" and all of their TVs. So these are pretty complex deals that involve various parts of the business because the thing is, when you go into these deals, you're not going to get as much per subscriber as if they were paying full price. But your hope is that the volume will make up for that, and then if you have an ad-supported service, you'll make up revenue through them looking at more ads and buying products and so on. [ 04:46 ]

What does this all mean for customers then? I think the goal for customers is making it a little bit more simple. And hey, if you can get a streaming service for free here or there, that's great. I mean, right now, it's not clear that all customers know that they can get everything. You know, I spoke to quite a few individuals who had access to certain streaming services through, you know, a T-Mobile account or whatever it was and didn't realize they had it. So there is a concern that, you know, it may cause more confusion than it is meant to. But for the savvy consumers who seek out these bundles, you can get some good deals. [ 05:26 ]

So kind of thinking forward, this kind of great rebundling, offering all these different monthly services that we have options to, what does it mean for streaming going forward? Is it a sign that maybe it's going to be a market that's shrinking or consolidating? I think this partnership mentality that you're seeing now, where everyone's kind of looking for a dance partner, is kind of like—I'd like to think of it as like the second phase of the streaming wars. The first phase was everyone launching. Now it's like everyone partnering and bundling and figuring out who their dance partner is going to be. And then the third phase will be M&A, where you'll see companies start buying other companies. There's a lot of reasons that's not happening right now—the regulatory environment, the markets—so partnerships make sense. And what's a better way to figure out if you should engage in merger talks with someone than to partner with them? [ 06:18 ]

All right, so phase two of the streaming wars. Jessica Toonkel, our Deputy Media Editor, thanks so much for joining us. Thanks for having me. And that's it for today's Tech News Briefing. For more tech stories, check out our website, wsj.com. I'm Zoe Thomas for The Wall Street Journal. Thanks for listening. [ 06:37 ]