Will New Streaming Bundles Be Too Little, Too Late for Price-Sensitive Customers?
Apple, Netflix, Paramount and Warner Bros. Discovery are all in various stages of bundling their streamers, but has their moment passed?
Just as streamers are finally cracking the profitability equation, they seemingly have a new problem on their hands. In reality, it’s not a new problem at all, but rather the exacerbation of the already-existing issue of churn. A new report from the Wall Street Journal indicates that November’s streaming churn rate hit 6.3% across top streamers in 2023, up from 5.1% in 2022.
- Special seasonal discounts and trials are helpful in retaining streaming customers.
- Streamers are beginning to bundle services in order to increase their value in the minds of customers.
- Streaming may have lost its chance to out-value cable.
How Bad is Churn Getting?
November is usually a good time of year for streamers, as the onset of colder weather has more people watching TV in general. But the Journal reports not only a rise in streaming churn during November 2023, it also cites an Antenna report that shows around 25% of American streaming customers have canceled at least three of the top streaming services — a group that includes Netflix, Disney+, Hulu, Max, and others — in the past two years.
WSJ cites cord-cutter Crystal Revis who recently canceled subscriptions to Disney+ and Paramount+, both of which executed price increases last year. She also would have ditched Hulu, but a special promotion offering the service for $2.99 monthly for six months convinced her to stick with that streamer.
“With the streaming services increasing their rates like they are, it’s like: ‘OK, do I pay for the cable?’” Revis asked The Journal rhetorically.
Revis is not alone. A survey from DIRECTV published in July found that more than one in five Americans had canceled a streaming service in the preceding three months, and the majority did so because of price concerns. Lower-cost ad-supported tiers can help; the Journal found that almost 60% of users who joined Disney+ in November signed up for its ad-supported plan. But as rising churn data shows, ad-supported plans by themselves will not be enough to fight rising price concerns among users.
Bundling to the Rescue?
One way that streamers can help themselves fight churn and keep customers subscribed in the long term is with streaming bundles. Bundles have lower churn rates because users face losing access to multiple services instead of just one if they decide to cancel, and many times the bundles are significantly less expensive than the component streamers would be if users decided to subscribe to them individually.
For example, select Verizon customers can now purchase a bundle of Netflix and Max for $10 per month. Separately, these services would cost $17 per month, and though the bundle isn’t widely available, it’s certainly a step in the right direction. Paramount and Apple are also reportedly discussing a bundle of their streamers that could be available soon.
The Streamable has documented price increases across essentially all of the top streaming services in 2023, as platforms pursue profitability. Many top services like Disney+, Paramount+, and Peacock are expected to be profitable by 2025 thanks to their efforts, but now, subscribing to the top streaming services costs about as much as a cable or satellite plan does.
It’s not too late for streamers to start getting their bundles to market in order to ease price concerns for cost-conscious users. But the time is now; customers have already noticed that stacking multiple streaming services is just as expensive as a traditional pay-TV plan, and with cable companies like Spectrum agreeing to their own bundles with streaming platforms, entertainment companies have to act fast or risk being outflanked when it comes to bundling.
Max
Max is a subscription video streaming service that gives access to the full HBO library, along with exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Thanks to the B/R Sports add-on, users can watch NBA, MLB, NHL, March Madness, and NASCAR events.