The rise and evolution of streaming super bundles

Blog series: Media industry trends 2021

Scott Purdy

Scott Purdy

National Media Industry Leader, KPMG US

+1 212-954-4207

In the United States, there are now more streaming subscriptions (340 million) than there are people (330 million), according to Ampere Analysis[1].

As streaming services compete in a crowded field, we’re seeing experiments with a variety of bundle formats and partnerships that blend video, gaming and music offerings. Creative bundling options offer streaming providers ready access to large customer blocks with a reduced investment in customer acquisition, but will these new offerings provide enough value to gain traction and convert an incremental audience into long-term subscribers?

Bundles offer consumers access to a wider array of content and may help balance the growing price tag of stacking several subscriptions to access the content they enjoy. They can provide savings over the cost of individual services, allowing consumers to access content they might have chosen to live without if that service had required a separate bill. This dynamic also allows the streaming service to capture at least some revenue from customers who wouldn’t subscribe otherwise.

Taking a broader view, the concept of the bundle is still an evolving artform for streaming providers. Done right, the industry will continue to re-imagine the concept of the streaming subscription until true super bundles emerge. Key to the discussion is differentiation, improved subscriber retention and satisfaction, and wider access to customers (including those of bundle partners).

Near-term challenges

Subscriptions increased dramatically as families spent more time at home. According to Digital Entertainment Group[2] research, U.S. subscription video-on-demand revenue rose nearly 33 percent in 2020 to $26.5 billion. In contrast, U.S. box office proceeds fell 80 percent in 2020 to reach a 40-year low, according to Comscore.[3]

Less certain, though, is whether streaming video will remain as compelling when in-person entertainment and travel return as viable alternatives.

As more cities reopen and people start to reengage with their favorite entertainment options, streamers may face an added challenge that goes beyond content loyalty or brand affinity. We may start to see more experimentation with bundles that pair streaming with experiences. Some providers include tickets to in-person venues or other services to market bundles as memberships rather than as streaming services.

Another unknown is how the addition of live professional sports programming to streaming services will reshape the streaming and legacy video ecosystem over the next decade.

Keys to success

For streaming providers, success will depend on:

  • Shaping content strategy and understanding their targeted customer base
  • Optimizing their partnerships and distribution capabilities

Companies should revisit their customer segmentation and targeting efforts to identify their best customers as well as the most effective offers to reach new subscribers and retain current subscribers.

This will require understanding customer acquisition costs and lifetime value across different channels. Understanding the effects of performance and engagement metrics on customer churn and average revenue per user is also important.

Another key success factor is expanding thinking about the partner ecosystem. Companies can become more valuable to partners by reviewing their value proposition, data and insights, and assets brought to the partnership.