The article seems to conflate the proliferation of music streaming services and of video streaming services. But the difference couldn't be greater: Spotify, Apple Music, and Google Music have a majority overlap in their catalogs. Apart from the odd exclusive, it would make little sense to subscribe to more than one of them.
Meanwhile, video streaming services have almost no catalog overlap, and genuinely do represent the return of cable-style bundling. Even beyond Amazon- or Netflix-produced content, the world of general film and TV content licensing is such that it's rare for a film or show to even appear on two of the top-tier services.
I absolutely agree and would add the article seems to miss a crucial aspect "unbundling" which, for a lot of people, are spending less on "entertainment" a monthly basis. Netflix and Amazon haven't spun "unbundling" into reverse. If anything, they're contributing to the acceleration of the phenomena. I didn't sign up for Amazon Prime for the movies or the music. The value for my money was there just for 2 day shipping and would keep it for that reason alone, everything else is a perk.
The article starts off with "No longer would anyone have to buy a $99-a-month triple-play package when all they wanted was the History Channel." And ends with, "the bundle is not a decaying symbol of legacy distribution. Rather, it is the new network effect: a critical strategy to amplify scale in the hope of building or deepening a moat to protect against foes everywhere."
I guess business school elites, like the author, are having a hard time wrapping their minds around what is taking place. It is pretty simple for me; Consumers want more choice and want it for less money on a monthly basis. They are more realistic about how much time they can devote to watching and/or listening to content which reflects in the winners and losers of this space. Further, the proliferation of Android set top boxes, Fire sticks, Kodi boxes, Chromecasts, and Rokus together with youtube and other streaming/free content will continue to erode all of the above.
Absolutely. Over the last year an interest in woodworking has caused me to shift from almost 100% Streaming TV/Movies to maybe 40% Youtube and 60% TV/Movies (Netflix type services).
Youtube recommendations occasionally put me onto a new content creator/creation group that adds to my regular viewing. Much of this is both educational (how-to videos) and entertaining. Finding something with the right mix of educational impact and entertainment value is, IMHO, far rarer.
The rate of new (albeit shorter duration) content on Youtube seems to outpace the rate of content I want to watch from the TV/Movie streaming services.
It's amazing the diversity of good quality stuff on youtube. Want to watch someone wading through rivers with a metal detector looking for civil war bullets/shells? You can!
> The value for my money was there just for 2 day shipping and would keep it for that reason alone, everything else is a perk.
If that were true for a large number of customers, the perk wouldn't exist.
Amazon is the "Everything Store" and Prime is the "Everything program". It's clearly bundling Every part of it reinforces loyalty to Amazon in unrelated sectors, from books to electronics to music to movies to more.
It also boils down to the prices they try to charges you for dematerialized goods. While music and videogames industries now seems to have find a good balance, Tv/movies is lagging behind.(except Netflix)
Do they really expect me to spend $80+ in order to introduce starwars to my kids while my father bough them on VHS and my brother on DVD?
(And that not even counting all the merch bough alongside...)
The original Star Wars VHS was $99. Not only is that a lot of money today, it was a phenomenal sum back in the early 80s when the product was released.
A lot of VHS pricing for a long time followed a price to rent at first release (i.e. video rental stores would pay a high price during the prime new release rental period) with the price dropping after some period so that individuals would buy it. Pricing was higher overall but it wasn't that high in general.
And that's what I did, but I would gladly have paid a few bucks or give a % of my monthly Netflix subscription to spare me the slow conversion from DVD to MP4 (because I only have an AppleTV and yes converting owned content is legal in my country)
I think the really interesting point from this article is about why bundling is so attractive when marginal costs are close to zero, for both the consumer and the seller. In the digital world, almost all services have a near-zero marginal cost, so bundling has a clear advantage.
It is also interesting when thinking about WHY people get so attached to the idea of 'unbundling', even when it might not be in their best interest. I think most people look at some of the large cable bundles, for example, and think "man, I am paying for so many things I don't watch!" What they don't realize is that even if the channels they didn't watch were removed, the cable company wouldn't be able to charge them much less, since the marginal cost for additional channels is near zero.
Nobody ever looks at Netflix and complains "I never watch most of these shows, I shouldn't have to pay for them" because Netflix doesn't encourage people to think in those terms.
Cable companies caused the demand for de-bundling via a partial de-bundling. If you could get all channels for $50 then nobody would complain. But if they force you to buy half the channels for $25 and half the channels for $25, people start to wonder why they can't just get a quarter of the channels for $12.50.
This is true, but the problem I have with bundling is that it creates a distorted market. If I like, say, Firefly, I want to essentially vote with my wallet and encourage the creation of more like that. If I'm paying for a bundle, the networks get to churn out whatever garbage they want and I'm either locked in or locked out. While I can elect to just not watch what I don't like, I can't prevent my money being used to make more of it.
With the old networks, a lot of the decisions about what to make are based on advertising. For now, Netflix can decide what to make based on accurate viewing stats and their only motivation is to increase and retain subscriptions. As long as things stay that way, they are motivated to prioritise good content, which is a step in the right direction.
I do worry however, that they still need to serve a lowest common denominator mass market, so bundling leads us back to where we started, with a few high quality exclusives per channel (e.g., Stanger Things, Game of Thrones, Mr Robot), but ultimately we're still paying for a lot of unwanted garbage.
With this model, the "channels" aren't incentivised to do what IMO they should be: curating high quality content to specific demographics (anime fan, sci-fi fans, romcom fans, etc). Instead, they will just do the minimum needed to retain each of them, while not really doing a very good job for any of them.
Well you don't have to. I've never paid for cable. I have this crazy thing called an aerial which picks up television signals out of the goddamn vacuum.
But if people ever DID look at Netflix and think that, there are services (Amazon) that let you pay to immediately stream a particular movie/show. Netflix is for the people who think "I intend to consume enough content that buying/renting shows individually is more expensive than a bundle."
Or "I don't want to think about buying individual things, I just want a lot of stuff that I can watch without dealing with billing every time I want to tune into some entertainment". I see it as a UX and a psychology problem, really. If you tell users that each episode costs $1 to watch, they'll watch less than if you charge them $15 a month and make 1 14-episode season available, and they might only watch half of it.
It's the idea that you're spending money with a specific action vs spending in general to get access to something where you could theoretically have as much as you want. It's the all-you-can-eat seafood buffet in Vegas. You feel like you're beating the house, but the house always wins. In this case though, consumers also win, because it's ~$15/month with no ads and no BS vs $50-120+ a month with Comcast or DirectTV for ads + waiting to watch what you want + contracts (Comcast does e.g. 1-year contracts in some markets) + lots of BS (Comcast also "rents" movies and does things like pay-per-view). The house can still win while providing an order of magnitude better value, but the old business model exists due to their oligopoly and regulatory capture.
Because the complaint is actually more complex. It isn't simply that you are paying for stuff you don't watch, it is that you want to watch something good but there isn't anything good to watch. Then those other shows, the ones you don't want, look like they have pushed aside the things you are interested in. Netflix is different because in the streaming model nobody perceives one show as crowding out another. So those shows you don't want to watch aren't impacting your day and don't need to be removed.
But every popular movie on my TODO list is unavailable on Netflix, because they tend to produce their own content... After watching a dozen movies/series in the French catalog, there was no good content left to see.
From my perspective, Netflix follows a massive hot & cold pattern. Once a year or so, they'll license a bunch of great content, I'll watch a chunk of it, then a few months will pass before the next round of deals are struck and content made available.
My current "system" is to pay Netflix year-round and to subscribe to HBO Now when GOT is released (and catch up on other HBO content at that time) and cancel when it concludes.
I wish Amazon and Apple would get their shit together and allow/provide Amazon Video on Apple devices. That would fill in any gaps for no additional cost (I already pay for Prime for shipping benefits).
But I do look at all my streaming services in aggregate and feel a bit annoyed that I'm paying for Netflix, HBO and Hulu and I'm still buying a bunch of TV shows on Amazon.
> the marginal cost for additional channels is near zero.
Is this really true? Setting aside barney54's ESPN example, I'd think that the emphasis in our current society on monetizing intellectual property would impose an artificial marginal cost for many service providers.
I've never worked _in_ any of the major networks or cable companies, so I could be entirely wrong, but the idea that channels present a low marginal cost to networks goes against my intuition when contrasted against e.g. Netflix/Hulu/Amazon's tendencies to cycle shows and films for cost cutting.
Kind of off-topic, but serious question: How long are shipping times in the US if you're not on Prime? I'm in Germany, where basically any domestic mail and parcel arrives within one day of sending it off (unless you're on Helgoland or something). Amazon still wants me to enroll in Prime to get next day shipping, but I don't and still get the item the next day anyway.
That depends on where you are in the US relative to where the good you want is stored. One thing to remember is that the US has 26 times more land mass than Germany[1]. But in general, it's 3 to 5 business days.
I don't know that land mass has all that much to do with it. Even in-state mail usually seems to take at least 3 business days if you're not paying extra for the rush.
I have the opposite experience. In fact, I stopped using Priority Mail because regular First Class tends to be at least as fast, generally next day within 100 miles or two days almost anywhere within California... for 49 cents.
(First Class Mail package is a little over $2 for 2 ounces.)
Many things with standard shipping and handling take a week or two to get to you.
A letter will take anywhere from a day to 3-5 days in the country, depending on where you are mailing to and from. This is mostly due to the expanse of the country. Boxes generally take a bit longer, and you pay for priority instead of just waiting until their load is big enough. In addition, a good number of places only work during the week to ship it out. This along with other upfront delays make it go a bit longer as well.
Oddly enough, sometimes you get packages from overseas before you get a domestic package, even though the quoted mailing time was longer.
Prime customers get priority shipping in Germany which most often means that you receive your order next morning even if you have placed the order only late afternoon. Rarely happens when you're not on Prime.
The value for a lot of people, myself included, is achieved without the video, music and books. If they went away tomorrow, I would still keep prime for shipping alone.
In the US, I feel this is no longer worth it. I've found a lot of people attached to Prime for the addon services, but I wouldn't pay for Prime now that Walmart offers free two day shipping for orders over $35.
Nearly as good as Prime, no subscription. I've almost entirely switched from Amazon.
If you've bundled a channel within the "basic cable" package, that channel is now being sold to millions of people. But the costs to produce/buy the content on that channel don't go up with the number of users, right?
It's not that it's cheap, but that it scales relatively quickly.
I don't know how much service providers pay to carry these channels though. I'd imagine advertising is still what covers most costs.
Cost to buy that content does go up with the number of users, the typical licencing agreement of a cable company to distribute a channel has pricing of $x/subscriber.
There can be some other conditions, e.g. if you distribute it to less than 100k subscribers then you still pay for a full 100k; or you pay $x for every subscriber that you have, no matter if you show them our channel or not; or you can distribute the nice channel A only to customers who also have our (not so nice) channels B, C and D, etc... but the core principle is that you do pay for content per subscriber.
Furthermore, the big content companies produce a lot of content in all genres, and they're (obviously) focused on their average revenue per user - and if they can get $x ARPU for their bundles, where the demand is driven by a few key channels (e.g. they expect everyone who wants A or B to pay for the whole bundle) then any a la carte unbundled packaging that would allow A or B separately makes business sense only if the a la carte customers would on average pay at least as much as the whole bundle costs. There's no extra cost to the content owner to give the whole bundle, rather the other way around (your 'shit channels' can get more advertising revenue since some of those who got it in a bundle would watch it a bit), but there is a loss of revenue if you start paying less for the channels that you do want.
Advertising covers the costs for the many shitty channels, those can be got/distributed nearly for free, but things that people actually want on their cable are quite costly, especially sports.
I was thinking more about production costs, of course it makes sense to sell the content based on number of viewers. I'm not very aware of who pays what though.
In an alternative universe cable would work like the internet: content carriers. Netflix is basically the most popular thing (normalized for traffic) and even they are basically paying ISPs to help get served better.
Comcast is charging to put data into their tube, and charging for access to the tube. They get paid on both ends. They can do this because they have no competition in most markets and there is little will in Washington to make this situation better for Americans.
Edit: also, get ready for Ajit Pai's FCC where Comcast, Verizon, ATT, TimeWarner, etc will be allowed to "zero rate" "select" services (read: when services pay their ransom). Data caps and speeds for the "regular" internet will go down without this, and first-party offerings from the ISPs will of course be exempt from the caps.
https://www.google.com/amp/s/www.wired.com/2016/11/att-time-... it's already happening. ISPs refuse to be dumb pipes and want to open additional revenue channels by figuring out creative new ways to charge everyone for moving bits across their network. They will continue unchecked and without meaningful competition.
Because being an undifferentiated dumb pipe pushes prices down to marginal cost, which is not sustainable from a business standpoint--which would leave us with no one but the government to invest in the infrastructure. I don't know about you but I don't want Trump, Ajit Pai, and Elizabeth Warren deciding how to allocate capital for network infrastructure.
Being undifferentiated, dumb operators of flying tubes left US airlines in a precarious state. As wireless grows increasingly competitive with wireline services, the telecoms will find themselves in the exact same place.
I've read up on this, and have always felt like the nuance is important.
Netflix _could_ just rely on the standard infrastructure like everyone else, but doesn't want to because it would provide sub-standard quality. So they also have their own "ISP" that hooks into Comcast and co.
This is less like Comcast + a website, and more like Comcast + another ISP. The dynamics are different.
It is also why CBS and others have bought up all kinds of niche networks. TruTV (e.g.) could probably never really be profitable but as part of CBS, they get economies of scale. Then all the cable and satellite companies are forced to pay for all of these extra channels. Even a marginal cost is still greater then the amount customers would pay directly or could be likely be sold through advertising. CBS also gets advantages that they can say we have X million subscribers who view our channels every single day!! Even most of that is on CBS proper and not TruTV.
Cable is being unbundled in favor of on-demand. The traditional broadcast/channel model is annoying now that many homes have high enough bandwidth to stream what they want when they want it. Netflix is getting business from people who think cable is overpriced but they're also getting a lot of business from people who are sick of never finding anything on TV and sitting through commercials when they do.
I'd probably pay Netflix $100/mo if they could deliver everything I would want to watch in streaming format without commercials. As it is, I pay Netflix and Hulu and Amazon and HBO. I don't pay Comcast for cable but I'm paying nearly the same for all the services I subscribe to.
It's always been about the desire for on-demand content. It's partly about pricing, but what consumers want is freedom. They want on-demand content and content discovery.
Your subscriptions don't have all of the hidden fees of Comcast -- set top rental, hd technology, sports access, network access, etc.
I save over $70 a month in fees by subscribing to Hulu, Netflix, Sling, CBS All Access, and Amazon Prime. Most of the savings is by not having to rent 5 extra set top boxes.
> The magic of bundle economics allows consumers to get more for less
Sometimes, yes, but sometimes it's basically a scam that relies on consumers having few options and low negotiating power.
Companies always want to come as close as possible to charging you without providing anything in return. Phone companies prefer to charge you for potential minutes for month, rather than actual minutes used, as then customers pay for the purely theoretical unused minutes. Cable companies prefer to bundle channels because you have to pay for the ones you don't watch.
It costs Comcast ~$0 whether you watch TV or not. They have no interest in how much or what you watch, only that you want the service. (It was exactly $0 before digital, when you got all the TV in your wire whether you examined the signal or not)
How valuable is that bundling to Amazon, against Walmart's free shipping ?
Considering it's only $10/month, and there are a lot of digital services offered for this money, very little(maybe $2/month per user) is left to support the e-commerce business. Is that such a big deal, in a fight against Walmart, which itself can play that cross-subsidy game, using your grocery bill ?
And that's why I canceled my Sling and PlayStation Vue subscriptions -- in the end they just turned out to be crappier cable than cable. So now I just watch more Netflix, which is the only company that seems to have the future of TV (mostly) figured out.
I'm probably going to cancel my Sling subscription as well. The Fire TV app is buggy as all hell and doesn't even work half the time. The other apps are rarely any better.
> In music, the story is even starker than in television. At one time, consumers used to buy a collection of songs — on vinyl, cassette and then compact disc. It was possible to
buy a single song or two in these formats, but the internet facilitated more and more people downloading individual
tracks.
Yet, today, there is an inexorable consumer shift to all-you-can-eat bundles of music.
Well, music often comes out as thematic albums, I don't see a problem with that. There are good stores where you can buy albums, and individual tracks as well if you choose. Bandcamp for instance indicated they are gradually growing, so there is clearly a market for that.
i know this article is talking about consumer services like cable but what does everyone think about unbundling a huge SaaS product with many (sometimes unrelated) features into smaller products each with its own price?
The problem is that, the challenges of assembling and delivering such a bundle aside, now you have a $200 monthly bundled sub that's effectively a next-gen cable bundle.
If the alternative is 20 $10/month subscriptions, one $200/month one has advantages: only one bill to pay, only one set of credentials to manage, a clearer picture of how much you're actually spending every month on content.
When was the last time you paid a paper bill? Or are you not using credit cards for some reason?
I do most of my streaming through a set-top device, so I add credentials once, and ... that's it. If I happen to watch through a browser, then there are password managers, which seems like an appropriate solution for the few that choose to do this.
If there were a 'manager' that streamlined all of this, that would be great, but a 'bundler' by definition doesn't let me pick and choose services.
> When was the last time you paid a paper bill? Or are you not using credit cards for some reason?
Does it matter? Last I checked, the GP's criticisms apply to electronic bills as well.
Credit cards make the situation significantly worse, since now you're managing your credit card information (which expires every few years) across 20 sites instead of 1. That's 20 sites that could fall victim to database theft. That's 20 sites that you'd have to trust to not be the thieves themselves. At the very least, that's 20 sites where you'd have to continually update the card numbers and expiration dates and CVVs.
One can mitigate the credit card issue by using some "trusted" payment system like PayPal, but you're then still verifying 20 different bills each month, checking them against your PayPal/CC/bank statements, inspecting them for discrepancies, etc. That's made significantly easier when you only need to worry about a single large bill.
I agree that a sort of "manager" would be nice. Perhaps some sort of marketplace or metaservice for multimedia subscriptions, where it would combine each service's monthly (or perhaps yearly) cost into a single bill with a single payment method, all itemized and unified.
Do any services like this currently exist? Let's say I want to manage all my subscriptions through a third party that lets me add / drop subscriptions and arrange when I'm billed, along with other features I suppose, does anything like that exist currently?
Meanwhile, video streaming services have almost no catalog overlap, and genuinely do represent the return of cable-style bundling. Even beyond Amazon- or Netflix-produced content, the world of general film and TV content licensing is such that it's rare for a film or show to even appear on two of the top-tier services.