Bundling and ad-supported plans will become increasingly important levers for streaming platforms to combat subscription fatigue and drive retention
In recent years, streaming services have reshaped how Americans consume media. Between Netflix, Apple TV+, Hulu, Disney+, Max, and more, the options seem endless. But as the number of streaming platforms increases, so does subscription fatigue. Are consumers getting tired of managing multiple subscriptions? How can streaming services keep their audiences engaged and subscribed?
Are We Reaching a Saturation Point?
Subscription fatigue is a real issue. The US results to our Global Streaming Study found that 42% of subscribers feel that they have too many streaming subscriptions and that nearly half of subscribers plan to cancel a subscription within the next year. Many subscribers are falling into a pattern of subscribing to watch specific content and then canceling once they've seen it.
The study also revealed an increase in the number of subscriptions per person, from 3.2 to 3.6, driven at least in part by a crackdown on password sharing and the availability of lower-priced, ad-supported plans. While these are effective levers to drive net new subscriptions, streaming platforms need to find additional ways to retain their subscribers.
The Rise of Bundling: A Strategic Response
By offering packages that combine multiple services at a discounted price, streaming platforms can provide more value to their customers and better retain them in their ecosystem – resulting in greater customer lifetime value. Bundles also help attract new subscribers, encouraging trial for some customers who may otherwise not have become subscribers.
For example, Disney offers an ad-supported bundle that includes Disney+ ($7.99), Hulu ($7.99), and ESPN+ ($10.99) for just $14.99 per month (~$12 per month cheaper). Other bundles include Netflix, Apple TV+ and Peacock bundle (StreamSaver) and the Disney+, Hulu and Max bundle (to be released).
The Science Behind Successful Bundles
When done correctly, bundling different products and services can significantly increase retention rates. A key component of successful bundling is ensuring that the combined discounted offering drives enough volume through increased retention and / or conversion to outweigh potential revenue cannibalization from those who would have subscribed at higher prices anyway.
For streaming platforms, this means carefully selecting complementary services that add real value to the consumer. For example, a bundle that includes a popular movie streaming service, a sports channel, and a kid-friendly platform can cater to diverse viewing preferences within a household.
Simon-Kucher experience shows that bundling increases product ownership by 1.5x-2x on average in consumer tech and is a critical part of the go-to-market playbook for tech companies as they mature.
Looking Ahead: The Future of Streaming
Streaming platforms are at a crossroads. Not only are they competing for share of wallet, but they are also competing against short-form content on social media for share of streaming time. Content will always play a role in driving subscribers to a platform but as the market matures, commercial levers such as bundling will become increasingly important. That being said, streaming platforms must take care to avoid the pitfalls of the cable TV industry they once disrupted. With new, cost-effective forms of content like social media emerging, it's crucial for streaming services to stay agile and attuned to trends and consumer preferences.
Streaming services must remain innovative and customer-focused to stay ahead of the curve. Discover how Simon-Kucher's data-driven methodology for effective product bundling can help your organization maximize value and reduce churn. Reach out to one of our industry experts today.
