Bundle Up, Winter's Coming.
There’s a reason for that. Subscriptions provide consistent revenue for businesses, and they simplify an increasingly complicated menu for audiences.
Today, the average person between the ages of 22 and 37 spends over $500 per year on digital subscriptions. About 80% of households in the US pay for a streaming subscription, and the average household pays for over three streaming services alone. and that doesn't account for gaming microtransactions and non-media subscriptions.
Netflix. HBO Max. Disney+. Peacock. ESPN+. Hulu. Amazon Prime. Apple TV+. CBS All Access. The list seems to grow every quarter.
Total cost aside, it’s just getting harder to find what you want and then remember where it is once you do. Just keeping track of who owns what content can feel like a part time job.
When it comes to journalism, one premium publisher after another decided that with display advertising in freefall and their relationships with audiences tragically intermediated by social platforms, it was time to pivot to subscriptions. Paywall activity has exploded in the last couple of years as more and more publishers invest in the technology and people required to build a thriving digital subscription business.
But it’s not just The New York Times or Bloomberg or Vanity Fair putting up paywalls. Something else has happened in the world of media in the last two years: the internet started to return to its roots, in a way.
Tools like Shopify and Substack have totally democratized access to business infrastructure, and now anyone willing to put in the work to build a meaningful and financial relationship with “1,000 true fans” can fund a single project or earn a living.
The proliferation of paywalls, subscriptions, and one person media enterprises makes bundling even more powerful as the number of monthly subscriptions we all have continues to grow.
We’re rapidly approaching an inflection point where the apparent savings of unbundling and the costs of having ultimate choice and control – in terms of both money and user experience – may put pressure on business models or create new opportunities for innovation.
And we’re starting to see the pendulum slowly swing back to bundling. Bloomberg recently announced a bundling offer with The Athletic, and the Washington Post and The Financial Times just did the same. The Paris Review and New York Review of Books also recently formed a "book club" to compound their offerings.
These partnerships make sense with the subscription landscape more crowded than ever. As more and more publishers put up paywalls and consumers reach “subscription saturation” (there’s only so much room in the wallet, after all), publishers and platforms have to combine forces to create additional value that justifies additional subscriptions for customers.
Disney already offers a bundle of the streaming services owned by its subsidiaries. A new start up called Buzzer just raised $4 million to help sports fans find the live sports streams they have access to from their various subscriptions.
Surprising precisely no one, Apple also recently announced its own subscription bundle that finally ties together all of the services the company has built in the last few years. Now customers can subscribe to Apple Music, Arcade, TV, Fitness, News, and cloud storage for one price in three tiers. Apple’s rapidly growing $13 billion services business is built on one idea: creating better experiences for customers, now in bundles.
When constructed and marketed thoughtfully, bundles can lower customer acquisition cost and increase value for users. This is part of the reason why Bloomberg covers luxury, the New York Times bought The Wirecutter, and Apple’s business is increasingly driven by average revenue per user.
Things aren’t going to just permanently stop at a point of perfect equilibrium on the a la carte to bundle continuum. When the economics and user experience favor one approach over the other depends on technology and the value of the content on offer at any given time.
Technology has totally democratized the process of creating a content business and entering a market. As the signal to noise ratio reaches a breaking point, new technologies, business models, and innovators will emerge.
Content may be king, but merchandising and distribution will always be the keys to castle.
CREATIVE STRATEGY DIRECTOR