As the top players on the streaming market continue to jockey for profitability and subscriptions, we’ve seen the Paramount Global CEO, Bob Bakish, credit their experiments in streaming bundling with their improved Q2 bottom line. Is bundling a valuable tool for the streaming market? We asked Brandon Blake, the best entertainment attorney in the USA with Blake & Wang P.A., for his take.
Paramount’s Q2 Reporting
Despite a rather modest gain in subscribers, Paramount’s quarterly report shows significantly narrowed streaming losses. This quarter also represents the first where we’ve seen them integrate their flagship streamer, Paramount+, with Showtime in the final month, with a price increase for the bundled service included. Of their $1.7B revenue, a significant amount was generated in the direct-to-consumer division, and it represents a 47% increase on the same quarter last year. Bakish was keen to attribute much of that peppy environment to their somewhat aggressive perusal of value-added bundling products.
Bundling certainly isn’t new to the Paramount environment, either. Even when Paramount+ and Showtime were strictly separate, they were offered at a discount for subscribers interested in both services. Paramount also uses pay-TV bundling efficiently in their non-domestic territories.
Some have been speculating about the streaming future of Paramount, given its small scale next to the tech giants and key rivals in the streaming scene. To the extent that some have been predicting a M&A move of some sort for them, despite the after-effects of their ViacomCBS merger only just settling.
Streaming Bundles- The Future?
So clearly they do have some valuable perspective to offer in this arena. In their case, with the bulk of their shares still family-controlled and a range of regulatory hurdles that would have to be overcome for a merger of any sort to look smart, joint ventures do seem like a good way to boost their reach and keep the profits Wall Street currently covet (over the previous subscriber-focused benchmarks) rolling in.
Take their joint venture with Comcast, SkyShowtime, entered into last year. It was a great vehicle to allow expansion into key European markets for both companies, while reducing the financial commitment needed on both sides. Additionally, the bundling concept allows the participating firms to build on existing consumer connections in a way that adds value for consumers. And where consumers see value, they feel less bitter about the costs of maintaining multiple streaming subscriptions- another issue we’ve seen in the last few years. Reduced subscriber churn is always good.
On top of this, bundling offers the opportunity for IP-swap between networks with less risk of lost revenue and the exclusivity-appeal that streaming currently seems to cling to.
So we’re left with the idea of reduced risk and cost margins, improved customer connections and visibility, and a potential way to generate greater value from existing older IPs that would otherwise sit in the vaults. While that could be of great use to almost any streaming service, its biggest appeal undoubtedly lies in allowing smaller streamers without the size to be truly competitive against juggernauts like Disney and Netflix to still play in the same ballpark.
As with all economic moves, bundling won’t be the sole strategy to rule them all. However, paired with other tactics, it certainly could be a powerful tool to level the streaming battlefield just a little.
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