As the curtain falls on another challenging year for pay TV, and streaming platforms grapple with subscriber declines and revenue setbacks, a new dawn is emerging. The cable cord is slowly giving way to a novel concept — the streaming bundle — poised to reshape the media landscape in 2024.
In the face of industry shifts, media executives foresee a pivotal year, with optimism fueled by the Charter-Disney deal serving as a harbinger of change. Tim Nollen, a Macquarie analyst, emphasizes that the recent clash between Disney and cable giant Charter Communications, marked by blackout tensions over fees, showcased the evolving dynamics. The resolution of this dispute saw Spectrum TV Select Plus subscribers gaining access to the ad-supported tier of Disney+ and ESPN+, setting a precedent for future collaborations.
John Malone, the visionary Chairman of Liberty Media and cable TV pioneer, predicts a surge in the integration of streaming services into cable bundles. The recent discussions between Paramount CEO Bob Bakish and Warner Bros. Discovery CEO David Zaslav regarding a potential merger further underscore the industry's transformative potential.
However, despite the demand for streaming bundles, major players have historically approached such deals with caution. The delicate balance between Average Revenue Per User (ARPU) and subscriber growth poses a unique challenge. While a discounted bundle might impact ARPU, the potential for exponential subscriber growth could outweigh the loss. Media companies housing cable networks may express concerns over cannibalization, but the prospect of a unified streaming future seems increasingly plausible.
As 2024 unfolds, the convergence of streaming and traditional media takes center stage, presenting an unprecedented opportunity for industry players to chart a new course in the ever-evolving landscape of entertainment consumption.
The chessboard of streaming platforms saw strategic moves in 2023, setting the stage for a transformative year ahead. Disney's acquisition of Comcast's remaining stake in Hulu and the unveiling of the Disney+ and Hulu platform marked significant milestones. With a comprehensive Disney+ bundle, including ESPN+ and Hulu, Disney forged ahead in the streaming arena.
Meanwhile, Paramount Global and Apple explored the prospect of bundling Apple TV+ and Paramount+, hinting at a new era of collaboration. Verizon, a telecom giant, reportedly prepared to offer a groundbreaking bundle—ad-supported tiers of Max and Netflix—for just $10 a month to its customers, promising a cost-effective streaming solution.
The integration of streaming into the pay TV bundle emerges as a beacon of hope for an industry grappling with an 18% decline in ad revenue for pay TV this year, according to GroupM. Streaming platforms, akin to pay TV providers, faced subscriber losses but demonstrated resilience. Netflix adapted by adjusting plan prices and introducing ad-supported tiers.
In the midst of this evolving landscape, Warner Bros. Discovery's profit in the streaming segment and the Disney-Charter deal offer insights into navigating the streaming era. The deal provides a framework for cable companies to transition into streaming, stabilizing subscriber trajectories and potentially boosting pricing.
As the bundling trend gains momentum, industry leaders like Disney, Warner Bros. Discovery, Paramount, Netflix, and Apple stand at the forefront. The breadth of content in their services positions them for substantial upside, embracing the evolving dynamics of the streaming universe. As the industry undergoes a generational disruption, 2024 promises to be a defining chapter in the streaming saga.
Responses from Disney, Warner Bros. Discovery, Paramount, Netflix, and Apple were not immediately available at the time of CNBC's request for comment.
— CNBC’s Alex Sherman contributed to this report.
The year 2023 witnessed significant maneuvers in the streaming arena, setting the stage for an industry poised to redefine itself in 2024. With Disney's strategic acquisition and the emergence of bundled platforms, streaming giants like Disney, Warner Bros. Discovery, Paramount, Netflix, and Apple are steering the narrative of the digital entertainment landscape.
As ad-supported tiers become integral to streaming bundles, the industry anticipates a potential remedy for the decline in pay TV ad revenue. Streaming platforms, weathering subscriber losses, demonstrate resilience through strategic adjustments, such as Netflix's pricing adaptations and the introduction of ad-supported tiers.
The Disney-Charter deal serves as a blueprint for cable companies navigating the transition into the streaming era, offering a glimpse into stabilizing subscriber trajectories and potential pricing growth. Warner Bros. Discovery's profit in the streaming segment further underscores the adaptability and profitability of the evolving industry.
As we stand on the brink of a generational disruption, 2024 promises to be a pivotal chapter in the streaming saga. With a focus on bundled offerings and the integration of streaming into the pay TV landscape, the industry is poised for transformation, offering consumers a diverse and cost-effective array of entertainment options.
Despite CNBC's request for comment, responses from Disney, Warner Bros. Discovery, Paramount, Netflix, and Apple were not immediately available.
— CNBC’s Alex Sherman contributed to this report.
