David Zaslav Floats Streaming ‘Super Bundle’: Can It Happen?

I swear I’m not saying, “I told you so.” OK, maybe I’m thinking about saying “I told you so.”

Two years ago, I published a Forbes piece noting how even early Connected TV/streaming was showing signs of resembling the cable business that it often mocked and threatened to replace. Fast forward to last week, amid a week of mostly news-free upfronts, as Warner Bros. Discovery
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(WBD) CEO David Zaslav hinted that streaming’s future might require streaming companies to package and market their streaming services in newly configured bundles with their competitors. This was no bolt out of the blue, as the company’s largest shareholder John Malone hinted at much the same last fall on CNBC.

A quick listen to the frustrations of streaming consumers would tell you why a new/old streaming bundling approach might make sense. “How many services do I need to subscribe to?” “Why do prices keep going up – that was what I hated about cable!” “I pay sub fees, but I also have ads now?” “How come I have this credit card charge for Paramount
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+ – I don’t even subscribe to Paramount+! Oh wait, I do?” “Why can’t I find HBO stuff on HBO Max? I thought I was getting all the stuff I like!” “Why do I have to pay an extra fee on Amazon
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for something that was part of my Netflix
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subscription last month?” These are outcries for a solution that balances the need for a sustainable business model with a workable proposition for multiple types of video consumers.

Of course, we already have bundling of multiple services offered by one company: “Disney Bundle” customers who take Hulu and ESPN+ along with Disney+ get an attractive bundled price, WBD’s Max (RIP HBO Max) incorporates Discovery+ content, and Paramount Global has announced that Paramount+ and Showtime will now be a combined streaming service. Yet the proliferation of options is overwhelming. From Comcast alone you can subscribe to NBCU’s Peacock, Xumo, and Now TV (yeah, you’ll have to look it up). But consumers like more than one type of content from more than one content supplier. Maybe the old fashioned “cable business,” for all its mistakes – the failure to create their own Netflix as soon as they saw the power of broadband video is a most obvious one – still have worthwhile features that streaming can draw upon.

The irony is the media business already tried this and kind of let it slip through their fingers. I was part of the original outside team that helped launch Hulu, which was the offspring of Fox
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and NBC Universal (David Zaslav was part of this), shortly thereafter joined by Disney and Providence Equity. It was to be a one-stop streaming destination for premium TV content from all its partners, a group they hoped would only expand.

Several subsequent corporate maneuverings ultimately undermined the notion of Hulu’s partnership. Comcast
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purchased NBCU and consequently accepted limits to NBCU’s ability to actively engage in Hulu decision-making. AT&T
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purchased Time Warner, and promptly lost interest in a Hulu investment. Viacom and CBS spent years battling each other before ultimately reuniting. And Disney’s purchase of Fox meant Hulu was no longer a partnership but a Disney-controlled property. These machinations, plus each actual and potential partner for too long expecting years more growth in the linear business, put just out of reach the collaboration necessary to figuring out an integrated streaming approach.

A re-bunding in some fashion wouldn’t be easy or simple. The history of the cable business is littered with some misshapen joint ventures from Excite@Home in the early broadband days to the addressable ad service Canoe Ventures. But the undeniable consumer demand for streaming content and the irreversible trends in linear TV require some profound business creativity here.

The institutional challenges of a re-bundling are not insignificant. I’m frankly skeptical Netflix, Amazon and Apple
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will jump onboard here at all. The new alignment of media companies will have to forge a financial partnership that works, from equity ownership to incorporating the understandably frustrated demands from creative stakeholders. Regulators will likely need some well-navigated handholding. Beyond these hurdles, a new era of streaming bundling would require some key elements to work, all hard but not insurmountable:

The dual revenue stream is foundational

The FAST (free ad-supported streaming TV) world – led by platforms such as Fox’s Tubi and Paramount’s Pluto TV – has demonstrated its consumer appeal with its “TV comfort food menu” of access to massive content libraries. But to sustain original, top-quality content creation and distribution, multiple revenue streams from subscribers and advertisers, as well as those from theater ticket buyers and merch purchasers, are essential. Consumers have lived with this in some fashion for 40 years and they accept that this is part of the bargain moving forward. It’s disingenuous to think or act otherwise.

Tiering flexibility is essential

Cable’s biggest problem was the inflexibility of the bundle. It doesn’t matter who’s to blame – programmers demanded all their services be carried on the basic bundle that kept expanding for decades, but cable operators also used every new channel as justification for raising rates. Any streaming bundling will require multiple price points with multiple content choices. Some content and some networks won’t make the cut for enough consumers to be viable, but this is the only way to sustain a system consumers will buy into.

Incorporating cross-company genre options is required

Consumers who want kids programming want it all – not just Disney’s. Same for those who are sports fans, news junkies (OK, maybe not Fox News viewers), and reality fans. A real bundle will provide access for different types of consumers to all of what they most want. Some of these “niches” are inevitably going to be more expensive than others – sports of course – but you can’t expect people to sign up for a streaming bundle to pay a premium for sports content they aren’t interested in to begin with. That ship has sailed – and is sinking.