Bundle resistance
How Pay TV players brace themselves for survival
Welcome back to Streaming Made Easy (SME). I’m Marion & this is your 5-min read to get a European take on the Global Streaming Video Business.
Every Friday in your inbox. Check out previous editions here.
Enjoy today’s read.
© CEO Xavier Niel during Free’s Press Conference in January 2024
ICYMI 🔥
Last week’s edition on Freely was my best performing piece ever so thank you ❤️
Two Freely like initiatives were brought to my attention by fellow executive Luca De Bartolo:
Tivù srl, a JV between Rai, Mediaset and Telecom Italia - launched tivùsat (in 3M HH),
LovesTV, a 5-year old HbbTV cooperation between RTVE, Atresmedia and Mediaset España.
Amazon better be ready, Walmart is said to be going after Vizio. Get to know Vizio here.
In January, I started a LinkedIn thread where I probed my audience about the following topic:
The general consensus?
Telcos have long lost that battle.
To say that I disagree is an understatement.
Let me show you why.
Today at a glance:
Scene setting
Live action
Scene setting
First, let’s agree on the parameters of today’s discussion:
What do I mean by super aggregator?
I mean a one stop shop where a platform offers consumers:
→ an easy way to consume content across a wide range of services and verticals (Free TV, Pay TV, SVOD, AVOD/FAST, TVOD/EST, gaming, music),
→ facilitated by a single bill where one can manage its subscriptions,
→ and depending on who the super aggregator is, consumers get access to a suite of other services (e.g. broadband and/or mobile subscription, free deliveries, banking & insurance, smart home & security etc.).
The aggregator may run its own offering (for years Pay TV tried vertical strategies with limited success, if not failures 👀 AT&T + Warner) but what matters the most is one’s ability to bring must have services under one roof with flexibility and at a reasonable enough price point so that consumers don’t feel trapped and overcharged.
Who are the super aggregator contenders?
→ The Pay TV players (or “Pay TV”): Telecom operators, Internet Service providers, Pay TV providers, MVPD and vMVPD, Cable operators, Satellite operators.
For ease of reference, let me add here mobile operators.
→ The Connected TV players (or “CTV”): device manufacturers, OS providers.
→ The OTT players (or “OTT”): essentially anyone putting content out there with no stake in a network nor a device (streamers, broadcasters).
CTV has disrupted the Pay TV ecosystem with a simple value proposition:
No strings attached: The consumer can come and go. You buy a device, you access the platform with no monthly fees due.
Endless choice: An open ecosystem where you can find everything under the horizon (for reference, a platform like Roku carries 20K applications in the US, 10K in international markets).
Now, the stage of disruption varies from region to region.
In its latest Pay TV report, Digital TV Research stated:
“The number of pay TV subscribers across 138 countries will remain at just under 1 billion. We forecast a slender decline until 2025, with a small recovery thereafter.
Between 2023 and 2029, 82 countries will add pay TV subscribers and 56 countries will lose subscribers. The US will be the biggest loser – down by 10 million subscribers.”
In 2022, the U.S. shed 5.9 million pay TV subscribers and in the 1st nine months of 2023 4.4 million according to Leichtman Group.
Why does it matter?
No one can be definitive about anything in this day and age (naming winners and losers) and clearly not make claims applicable at a global level.
Also history tends to repeat itself: a big bundle → cherry picking → rebundling.
SVOD was supposed to be it then we got tired of searching for content and managing multiple subscriptions.
Now free linear made a come back (in streaming this time) until another hot new thing comes along.
Now, what doesn’t change:
The need for broadband and mobile networks to support our media habits
The need to make monetary adjustments to our day to day spend
The number of hours in a day
The thirst for simplicity
The desire to save time
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Live action
I extensively covered the TV OS landscape so I won’t cover how CTV players fight to rule our living rooms. For a refresher, head over here to my CTV series.
I will also park (for now) the shot OTT players like Amazon or RTL+ have at being super aggregators.
This week, I’m interested in the Pay TV guys and will showcase concrete examples of how they approach aggregation.
Verizon
Meet +Play and myPlan:
If it doesn’t work in your email, head over here.
Pros:
Diversity: Video, Music, Gaming, Sports, Social Media (Snapchat+), Lifestyle (Calm, Peloton, Duolingo and more), Retail delivery, accessories, banking, concert tickets
Choice: add ons (22 different SVOD)
Master bundles: Disney bundle, Apple One, Apple Music
Promos, savings, perks
Cons:
A mini “app store” in comparison to what CTV offers.
Limited flexibility to constitute your own bundle. A la carte add ons would quickly add up.
If one of you is a customer, come tell us about the viewing experience on platform.
Deutsche Telekom
Meet Magenta TV:
DT is a German Telco.
Magenta TV is DT’s response to the CTV disruption referenced above.
It is a TV platform which addresses Internet & Landline customers but also cord-cutters who can access it via a skinny bundle.
Magenta TV comes with:
- A set top box or a streaming dongle or as a Smart TV app,
- Features like cross-search, time-shifted television, personalised quick start bar, a voice assistant,
- hundreds of TV channels, stand alone or bundled SVOD (Netflix, Disney+, RTL+, Joyn, Magenta+ etc.), free content (Pluto TV launched in 2023), a sport package (DAZN + Sky + Magenta Sport) etc.
Prime Video is still missing as it tends to worry local players with their one-stop shop partnership approach.
You read RTL’s earnings calls and part of the growth is attributed to Magenta TV.
“The number of paying subscribers for the German streaming service RTL+ increased by 48.1% to 4.016 million, compared to 2.712 million at the end of December 2021.
The strategic partnership with Deutsche Telekom to bundle RTL+ Premium in Magenta TV, reality TV formats, football matches of the UEFA Europa League and the growing number of original formats such as Sisi, Der König von Palma and the Bushido documentary contributed to this growth”.
Free
Meet Ultra:
The French market is a highly competitive one with 4 operators fighting for subscribers and historically low ARPUs.
Free has always assumed the latest kid on the block/troublemaker role on the market.
Ultra is their latest set top box which is “ultra powerful and ultra generous”.
Powerful how?
The 1st operator to offer ascending and descending 8Gb speed (ideal for streaming, gaming and working from home).
Also the 1st to offer wifi 7 (a new standard released early January) which is said to be x5 faster.
Their CEO also promoted the eco-friendly performance of the device (95% energy saved).
Generous how?
For this launch, content is at the core of the offering (vs the prior set top box which focused on product and service innovations).
Bundled with the box, you get: 280 TV channels, Prime Video, Netflix, Disney+, Universal +, Canal+ Live, Cafeyn (digital magazine subscription), Free suite of own and operated services.
I hadn’t seen such an extensive bundle in years, if ever.
You can do without the content bundle of course.
Free also offers up to four 5G mobile subscriptions at a discounted price.
Check out the price?! I pay 60€ for internet alone in the Netherlands.
I think you understand better now why the French market has resisted well to cord-cutting so far.
Now French Telcos see usages shifting so they finally start bringing their apps to CTV.
What Pay TV players have going for them:
→ Internet, Mobile
→ A solid multi-vertical content offering
→ A 1st party data relationship with their customers
→ Multiple touch points on and off platform (stores, sms)
→ Billing which is the biggest weakness of CTV (except for big tech). On most platforms, billing happens off platform leaving customers having to manage their subscriptions on their own.
Billing also facilitate bundles which CTV doesn’t do except for one off operations with one device + one subscription bundles.
What they should work on:
To be a super aggregator, you need to offer a stellar UX and UI with curation, discoverability and personalisation features.
Providers haven’t deployed the technology and commercial strategy to turn their UI into billboards like CTV does, leaving a lot of money on the table.
For years, especially in Europe, providers stayed clear of CTV thinking they could do without, they could resist, they can’t. They need to be device agnostic to ensure they are the go to platform for their customers.
Faster innovation and time to market are a must or fear not to be eaten alive.
Where do they stand:
Super bundling platform Bango surveyed 115 US and UK telco leaders:
88% of telco leaders in the US and UK have plans to launch a subscriptions ‘content hub’.
88% of telco leaders see Super Bundling as a vital future revenue source.
More than half of telco leaders (54%) plan investments of at least $10 million in super bundling and subscription hubs.
63% of telco leaders believe their organisations will lose revenue and market share if they fail to launch a subscription hub.
Source: Report 2023 The Final Frontier
What do customers say:
78% of subscribers want one single platform to manage all of their subscriptions
51% of subscribers want their cell phone provider to provide this all-in-one subscription service.
Source: Report 2023 ‘Subscription Wars’
Now let’s be clear, I have no skin in this game.
But as I have been on both sides of the equation (Pay TV and CTV), I have only one certainty: everyone is trying to be a super aggregator, no one has won yet.
That’s it for today.
Enjoy your weekend and see you in 2 weeks as I’m going analog for a bit 📵
Before you go:
By night, I write Streaming Made Easy and also on Linkedin.
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