Despite the allure of bundling streaming services to gain market dominance, industry experts question its effectiveness. Disney's and Warner Bros. Discovery's recent announcement to merge their platforms has raised concerns that it may undermine the core purpose of streaming: personalization and customer satisfaction.
The entertainment landscape has been undergoing a seismic shift, with streaming services rapidly replacing traditional broadcast and cable networks. In a bid to stay competitive, major players such as Disney and Warner Bros. Discovery have embraced the strategy of platform bundling, offering consumers access to multiple services at a reduced price. However, industry experts have expressed skepticism, arguing that bundling may ultimately defeat its own purpose.
Bobby Iaccino, co-founder of Path Trading Partners, believes that bundling undermines the fundamental principle of streaming: user-centric customization. Subscribers who are forced to pay for a bundle of services may not be interested in all the included options, leading to dissatisfaction and potential churn.
"Bundling defeats its own purpose," Iaccino said. "It's like buying a car with features you don't need. Why should consumers pay for services they don't use or want?"
Disney's CEO, Bob Iger, has acknowledged the need to improve user experience and reduce churn. At the MoffettNathanson Media and Communications Summit, Iger emphasized the importance of investing in technology to personalize the viewing experience and minimize marketing costs.
"We need to invest in technology to serve the user first," Iger said. "Our marketing expenses are too high because we don't have the ability to send highly customized messages to our subscribers."
Artificial intelligence (AI) and machine learning (ML) play a crucial role in developing personalized user experiences. By analyzing user data, streaming services can tailor recommendations, create dynamic home screens, and optimize content delivery. Netflix, the streaming pioneer, has been a trailblazer in this area, earning widespread praise for its sophisticated user interface and algorithm-driven content discovery.
Disney and Warner Bros. Discovery need to invest heavily in technology to match Netflix's capabilities. This will enable them to provide users with a seamless and highly personalized viewing experience, reducing churn and increasing engagement.
Engagement is another key factor in the streaming business. Subscribers who are deeply engaged with a platform are less likely to cancel their subscriptions. Disney is exploring ways to increase engagement by incorporating Hulu and ESPN+ into its Disney+ platform. This strategy aims to offer a wider range of content and cater to a broader audience.
Another critical issue facing streaming services is password sharing. Disney has announced a crackdown on password sharing, following in the footsteps of Netflix. Curbing unauthorized access will help platforms retain subscribers and ensure revenue growth.
Despite the challenges, Disney and Warner Bros. Discovery remain optimistic about their streaming businesses. Disney forecasts profitability for its combined streaming platform in the fourth quarter, with long-term targets of double-digit profit margins.
The future of streaming remains uncertain, but one thing is clear: user experience and personalization will be paramount. Bundling may be a short-term strategy to gain market share, but in the long run, it is the quality of each individual platform that will determine its success.
