Despite Myriad Sports Streaming Services, Bundling Will Re-emerge
The National Basketball Association and ESPN (News - Alert) are planning a new online video service that would stream regular season games, apparently on an over-the-top basis, without requiring purchase of a linear video subscription.
The contract rights for such a move have been approved by the NBA, which means we might eventually see a direct-to-consumer NBA package similar in revenue model to HBO's over the top streaming service and the CBS All Access over the top streaming service.
Starz likewise is launching an over the top video streaming service for Asia, Africa, the Middle East and Latin America.
It seems only a matter of time before other channels and networks also decide it is time to launch their own OTT services as well.
All of that activity will have observers noting the “end of bundling,” the “end of the linear TV business” and similar themes.
That might be true for a brief period, when choices are rather few. If and when most major networks offer a direct-to-end user streaming service, something odd will happen: networks will be rebundled, because users will not want to deal with all the hassle of buying separate subscriptions.
Ironically, the unbundling trend will lead to rebundling.
The new issue will simply be a matter of what entities emerge as the leading “new bundlers.” Some might argue that is why Netflix poses such a challenge to existing distributors.
In a future market where there are many choices, and channels can be purchased a la carte, most consumers will find it is inconvenient to buy many discrete channels. That problem is bounded when only a few subscriptions are necessary.
But nobody will really want to deal with dozens of subscriptions.
And that means bundlers will reemerge. The issue is whether the existing linear distributors are best placed to be the leading new bundlers, or whether new contestants and market leaders will emerge.
As part of its deal, ESPN negotiated a package of games for the online video service. The NBA’s “League Pass” offering already allows users to stream live regular-season games that aren’t televised nationally and aren’t available in their home market.
The important shift is that the new streaming service will be available directly to customers, without the “sell through” requirement, where customers have to purchase a linear video subscription first, before they are eligible to buy the streaming service.
The point is that, over time, bundling is going to re-emerge as a key retail packaging strategy, even if the immediate impact of over-the-top streaming service launches is to increase a la carte buying.
Edited by Rory J. Thompson