Differentiation Through Bundling

11 Sep, 2017 By: Erik Gruenwedel

---

In an over-the-top market filled with diversity of content, niche subscription streaming services are partnering to stand out. While the idea of combining standalone SVOD services that eschew the traditional channel bundle might seem ironic, economic realities are driving players together.

Hulu is partnering with music platform Spotify to offer combined services for $4.99 monthly — $13 less than subscribing to the services separately — to domestic college students at accredited schools.

Two years ago, Hulu partnered with Showtime, offering the pay-TV channel’s upstart OTT service at $8.99 — 18% off the regular $11 monthly fee.

Showtime OTT is available for the same discounted price on Amazon Channels, the e-commerce behemoth’s platform of third-party OTT services available to Prime members.

Spotify, which had 60 million subs through July, is looking to safeguard its sizeable market lead over Apple Music (27 million) and upstart Amazon Prime Music (available with Prime Video), according to analyst Justin Patterson with Raymond James.

“Fragmentation is only growing,” Patterson wrote in a note, as reported by , while adding that a majority of user-time is spent on only a handful of apps.

The analyst contends that of the 5,000 apps on Roku, Netflix captures about a third of all user time. Yet, Netflix just secured a distribution deal with T-Mobile USA.

Patterson believes Netflix’s pricing, growing original library, and shift into movies are strong enough drivers to secure a place in most consumer households.

He suggests a Pandora and SiriusXM partnership could be beneficial to both parties if content segmentation were achieved.

“If Pandora can obtain unique content, then there is a potentially meaningful source of differentiation that could drive engagement (and thus revenue and profitability),” Patterson wrote. “Leveraging SiriusXM’s auto presence could also theoretically benefit Pandora via a more seamless experience, although it remains debatable whether distribution is truly a constraint for Pandora.”
 

Bookmark it: