In a bid to navigate the fiercely competitive streaming landscape, Apple and Paramount Global are reportedly in early discussions about bundling their streaming services, Apple TV+ and Paramount+, at a discounted rate. This potential collaboration marks the latest effort by major entertainment players to join forces, making their offerings more affordable and appealing to consumers.
The move comes as entertainment giants face heightened competitive pressures, leading them to explore innovative ways to retain and attract subscribers. Rising subscription prices in recent months have been a strategy to achieve profitability, but this has resulted in an increase in customer defections. Streaming services are grappling with the challenge of retaining subscribers who often cancel subscriptions once they finish binge-watching specific content.
Bundling streaming services has emerged as a strategic response to combat churn rates. By offering a combination of services in one package, companies reduce the likelihood of subscribers canceling any individual service in a given month. Data from Antenna, a subscriber-measurement company, suggests that this approach is effective in retaining customers.
Erin McPherson, Senior Vice President and Chief Content Officer at Verizon Communications, notes that the rebundling of streaming services is happening faster than anticipated, emphasizing that bundles are here to stay.
The trend of bundling streaming services is gaining momentum across the industry. High-profile services like Netflix and Max have already entered bundled deals with Verizon, and similar arrangements are anticipated, with Warner Bros. Discovery expressing openness to bundling Max with other streaming services.
Both Apple TV+ and Paramount+ experienced a customer-defection rate, known as churn, of more than 7% in October—higher than the industry average of 5.7%, according to Antenna data. Disney’s success in bundling Disney+, Hulu, and ESPN+ suggests that offering services à la carte as well as in a package can lead to lower rates of subscriber defections.
Apple, already offering Apple TV+ as part of the Apple One bundle along with other services like Apple Music and Apple Arcade, has demonstrated a lower churn rate compared to its standalone Apple TV+ service, according to Antenna.
Paramount has been proactive in bundling its streaming service. The ad-supported version of Paramount+ is accessible at no cost to members of Walmart’s premium program, and the company has collaborated with Delta Air Lines to provide free access to SkyMiles frequent-flier members during flights. Additionally, Paramount+ is available in a bundle with Netflix for certain Verizon customers.
As streaming giants navigate the challenges of customer retention and intensifying competition, bundling services at discounted rates has emerged as a compelling strategy. The discussions between Apple and Paramount reflect the industry’s dynamic response to evolving consumer preferences and the quest for sustainable business models in the rapidly changing streaming landscape.
(Source: Jessica Toonkel | WSJ | 9to5Mac | Reuters)
