THB #372: The Math of Re-Bundling

Here is what Streaming was supposed to be…

500 million worldwide households… ARPU around $17/mo per household… $102 billion a year for each streamer that reached that threshold.

Second tier? 250 million worldwide subs… $12.50 ARPU… $38 billion a year.

That is the business that Wall Street decided was realistic and invested in anticipation.

But that is not where we have landed at this moment of relative stasis. Here is what Streaming is these days…

Netflix is the leader and the leader is doing about $32 billion a year on 232.5 million subs generating a $11.70 ARPU this last quarter.

In second place as a pure streamer is Disney, with 5 distinct revenue streams at this point:

Disney+ doing about $8 billion a year (without Hotstar/India) on 104.9 subs generating $6.47 ARPU this last quarter.

Hulu is doing about $6 billion a year on 42.7 million subs and an ARPU of $11.73 this last quarter.

Hulu Live TV - $5 billion on $92.32 ARPU

ESPN+ is doing about $2 billion a year on 25.3 million subs generating $5.64 ARPU this last quarter.

Hotstar - $400 million on $.59 ARPU

About $22 billion a year for Disney.

Warner Bros Discovery is around $10 billion a year on Streaming, $7 billion domestically.

Paramount+ is around $6 billion.

Peacock isn’t at $1 billion in revenues yet.

So… everyone is leaping about, trying to find the next great answer of how to manage this all.

Many of us have been saying forever that Streaming will eventually reproduce much of the Cable experience for consumers, by necessity. The offerings, from the start, have offered the freedom to churn, which weighs on every one of thee businesses, some more than others.

Business craves stability from which it can push off in other directions to try to grow. No one wants to spend every month forever trying to please their customers in a way that assures they will stick with them. They don’t expect to have loyalty without effort… but the idea that a bad month or two of programming can do real damage is a true Sword of Damocles.

So… re-bundling.

Cable/Satellite has lost more than 50 million subscriptions so far.

Virtual Cable (vMVPDs) has only signed on about 17 million subscribers.

So there are over 30 million households in America living with an antenna or without the broadcast and cable networks that are not available or subscribed to as Streamers. A lot of those households have Netflix, Disney+, Amazon, and some other streamers flexing in and out, spending (broadly) less than $50 a month.

The next missions are to get those 30 million people back to spending at least $100 a month. And to keep the 50 million living on the edge of cord cutting ready to spend. And to keep the 25 million or so who are already spending over $100 a month on Streaming happy.

That means a mix of higher prices for individual Streamers, a higher percentage of households with greater stickiness for them, and taking advantage of every opportunity to overprice based on consumer loyalty to a brand or segment.

There are many ways to approach these goals. But in every case, there are many powerful players pushing hard to maximize their individual concerns.