Finally, streaming came for the cable bundle itself. It separated paying for content from paying for the pipe that carries it, letting us buy internet service from our cable provider while signing up with Netflix, Hulu and the like for the content we watched — and in some cases only for the content we watched, not a bunch of channels we weren’t interested in.
The new partnership among ESPN, Fox and Warner Bros. Discovery announced on Tuesday is the culmination of these trends. It is arguably also a sign that they are played out and the industry is ready to rebundle.
The three companies are joining forces to build a sports megastreamer that will offer professional football, baseball, basketball, hockey, Formula 1 and NASCAR, tennis and more, all in one place. The service won’t quite provide one-stop shopping, because many games and matches will still air on other networks. But it will offer a deal that is likely to be pretty attractive for people who watch a lot of sports. Exactly how attractive will depend in part on the price, which hasn’t yet been announced.
Even before this detail and many others are hammered out, one thing is clear: This could be the last straw for the traditional cable bundle. Aside from C-SPAN, live sports has been the main reason people needed cable. The more options they get for watching sports online, the less true that becomes.
At the same time, this new service gathers in one location a bunch of sports that used to air on various networks, a kind of rebundling, though along different lines from the previous bundle. And that’s not surprising; Fubo TV has already provided a similar service. Bundling is an efficient way to deliver value to users. And in some ways, the economics of the internet are making it more necessary.
I know, I know — my readership is full of happy cord-cutters who want to tell me how much they hated the old cable bundle. But you like bundling, I swear; when I wrote about airfares, you couldn’t wait to tell me how much you hated having to pay for every little thing rather than having the price of seat choice and checked bags included in your ticket. Which is also “bundling.”
Bundling might cost a bit more, but it saves a lot of annoyance and decision-making, which is why so many consumers prefer things like all-inclusive vacations, and why bundling is a common business practice. What cable consumers most hated was the price of the cable bundle, and, fair enough, it was outrageous. Notably, a big part of that price was sports; ESPN has reportedly been collecting $9 a month per subscriber from cable companies, a cost that the companies passed along to many customers who never watched a game.
Yet we paid those charges for so long because the bundle was actually very valuable! We got the channels we watched a lot, plus an option to occasionally see other things, such as the Olympics or a congressional hearing. Even if you really love “Say Yes to the Dress,” it’s nice to occasionally watch something else.
It was also efficient for cable companies to provide service this way. It cost them little to offer any viewer more channels — all of which flowed through the same pipes — so they profited by getting subscribers to pay a little more for a lot more channels. Even better, the bundle saved money on customer service, since their customers were no longer constantly picking up and dropping channels.
The same value for providers and customers is one reason to expect rebundling of our fragmented streaming market. Another is that, as unbundling continues, companies become more dependent on subscription revenue. And most consumers can afford only a limited number of subscriptions.
This number is much smaller than the number of services — music, newsletters, newspapers and magazines, and video streamers — now vying for subscription dollars. This is why so many services are losing money. The market can winnow that number in three different ways: Some companies go bankrupt, as is happening in the news business. Some can unite to form larger companies, as happened when Discovery and WarnerMedia merged in 2021. And some can form partnerships like the new sports streamer.
Which methods companies choose will depend a lot on their individual markets and a little on the individual corporate players. One way or another, though, the consolidation has to happen. And the result might be something a lot closer to the mass-media markets of yore than the ultra-niche free-for-all we’ve seen lately. The Great Unbundling is finished; now, we’re all going to bundle up against the cold, hard logic of the market.
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