US video streaming companies are joining forces to attract new viewers, boost ad sales and ultimately turn a profit — something only Netflix has so far managed.
Whether it’s Disney Plus, Hulu and Max, or ESPN, Warner Brothers Discovery and Fox — the streaming world is reshaping itself in unlikely alliances.
The sudden team spirit is all about substance, with Netflix being the only streamer that managed to cover the exorbitant production costs to keep users engaged.
Netflix’s stellar run continued in the second quarter as it continued to gain millions of subscribers and generate billions of dollars in revenue.
In 2024, having multiple streaming accounts may cost more than an old-school cable or satellite package whose high prices, running into the hundreds of dollars, helped lure viewers into Netflix’s arms.
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For Jeff Shell, who will soon lead the new Skydance-Paramount Global Group, signing up to a whole range of platforms is no longer possible.
“I don’t think it takes rocket science to make the case that the consumer situation is unsustainable,” he said.
These packages aren’t just about saving customers money, they’re also a smart business move, experts said.
“Grouping reduces churn,” explained Mark Boidman of Solomon Partners.
“If you’re going to subscribe to one or two streaming services because they have a show you want right now, it’s very easy to unsubscribe” once you’re done, he said.
With bundling, you’ll think more before you pull the plug, Boidman added.
One example is TV and Internet giant Comcast’s new StreamSaver package.
For $15 a month on top of your cable or Internet bill, you get Peacock, Netflix and AppleTV+ — all for 35 percent less than buying each service individually.
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Disney+, Hulu and Max are expected to offer a similar joint discount until the end of 2024.
“The basic business question is, ‘Do I make more money from new customers, or do I lose money from customers who’ don’t pay at all,” said Michael Smith, a professor of information technology at Carnegie Mellon University.
Beyond Netflix, streaming remains a loss for all major platforms, from Peacock to Max, as well as Disney, which promises to return its Plus platform to the black in the fourth quarter.
Alliances will bundle more viewers and attract advertising, which is again in favor, including Netflix.
The alliances will allow them to build audiences that can be targeted by advertisers, “which could be very valuable,” Boidman said.
Smith warned that “the challenge will be figuring out who has access to the data and how you share that data” among partners.
“If you break up, who keeps it?” Smith added.
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Collaboration can also provide an advantage in content marketing.
ESPN, Warner Bros Discovery and Fox have given few details of their partnership, which will result in a dedicated sports platform.
Sports rights can be extremely expensive, but the partnership is likely to give the platforms extra leverage in negotiations with leagues and event organizers.
Source: AFP