Wolk’s Week in Review: WBD and Disney go a'bundling, FAST services are good business

Wolk's Week In Review

1. WBD and Disney Go A’Bundling

Disney and WBD are going to launch a bundled offering of sorts. The details are not available yet, especially the two big details: how much will it actually cost, and is this a full year only deal, a month-to-month only deal, or both?

Those are important questions no doubt, but the fact that The Great Rebundling is proceeding apace is really not all that surprising. 

In this case it would seem that Disney and WBD are making a strong case to be consumers’ number two streaming service, one of the ones they don’t churn from. It’s a compelling argument for viewers who care about news—Netflix has no news service, while the new bundle would offer CNN and ABC News. It will also have sports, though the extent of that is also very unclear: ESPN+ does not appear to be part of the bundle and NBCU is looking to steal WBD’s popular NBA offering, leaving them with a bunch of NHL and college games. So not a super compelling get-your-sports-here argument.

This is not the first example of Disney and WBD joining forces either—both are major drivers behind “Spulu”, the controversial sports bundle announced last month, and the likely reason why ESPN+ is not a part of the new bundle.

Why it matters

The yearly subscription bit is huge, which is why I would be pretty shocked if the new plan did not rely on a yearly subscription model—that has always been the trade-off on subscriptions of all types—sign up for a year and we’ll give you a deal on the price.

In TV, it’s a particularly strong selling point as it helps reduce churn, thus making the ad sales teams’ hearts soar as it lets them guarantee that they will have more or less the same sized audience all year long. Which then makes it easy for them to sell to advertisers who are skeptical (to put it mildly) of All That Churn. 

So there’s that.

Then there’s the question of overlap. 

Chances are high that the decision tree on this is going to go something like this: “I already subscribe to Max, but may want to subscribe to Hulu at some point this year too. If a train leaves Indianapolis at 3pm traveling southbound at 40 mph, how many months of Hulu will I need to subscribe to in order to come out ahead with this deal?”

Which brings up yet another question about the deal—is it retroactive? In other words, if I am already a monthly subscriber to Hulu, Disney+, Max or all three, can I jump on this deal instead? What if I have the Disney bundle that gives me Disney+, Hulu and ESPN+?

I’m thinking that the majority of people interested in this offer will already be subscribing to at least one of the three services and so the question then becomes whether it makes sense for them to take advantage of the bundle offer. 

Which depends on what the terms are.

One final point: I was also surprised to see that the deal included the ad-free versions of all three services. Given how tough it’s been for all the SVOD services to sign up ad-supported viewers, it would seem to make sense to make use of tactics like bundling deals to push them there. (That, or do the Amazon thing where BOOM! everyone is on the ad-supported tier.)

I still stand by that projection though—that we are going to see much bigger pricing gaps between the ad-free and ad-supported tiers of SVOD services as a way of driving more subscribers to the ad-supported tier.

Here again, I’m looking at the user journey: “I want to watch the new season of The Bear on Hulu. I know that I will unsubscribe when it is over. The gap is just $10/month, so why not?” But, if that number is closer to $20/month, “why not” may turn into “screw that.”

So there’s that too.

What you need to do about it

If you are Disney and WBD, you’ve got a laundry list of decisions to make:

  • Monthly plan, annual or both?
  • And if annual plans factor in, how much deeper a discount do annual subs get versus month-to-month?
  • Do existing subscribers get grandfathered in?
  • What happens to people who subscribe to the Disney+ bundle with ESPN?
  • What happens to people who subscribe to (or want to subscribe to) Hulu Live TV?
  • Will you let third parties (Roku, Amazon) sell the subscription?
  • How will you handle cancellations and partial cancellations? Will those users need to establish new accounts to keep subscribing to one or two of the services?

It’s a lot to take in. Just be smart about it and make sure consumers feel you are on their side. Something they most definitely did not feel from the cable companies.

If you are an MVPD, what are you waiting for? Bundling seems like such a logical first step for you, given that you can also throw in broadband. I get that there are legal issues around your carriage deals and that you don’t want to cannibalize your still sizable pay TV business. But surely there is some way to do both?

Think about it.

2. FAST Services Are Good Business

If we learned one thing this week, it’s that it’s better to be the cat herder than the cat. At least when it comes to FASTs.

While much has been made about the questionable business model of many (but not all) FAST channels, FAST services are largely thriving, as recent earnings reports from Tubi and VIZIO would seem to confirm.

Both companies reported impressive results this past quarter

Tubi, Fox’s main foray into the world of streaming, now has 80 million average monthly users, up 13 million or almost 20% from a year ago. That includes a 36% YOY jump in total viewing time. All of which served to grow revenue by a whopping 22% in Q1 2024.

Meanwhile, VIZIO’s Platform Plus, which includes its WatchFree+ FAST service, also saw growth last quarter, with a gross profit of $88.3MM, a 20% jump from last year.

Why it matters

FAST services, if you recall, are the companies who aggregate and curate all of the linear and on-demand content, create interfaces and program guides, sell ads and otherwise serve as cat herders-in-chief. 

And at both Fox and VIZIO, those FAST services served as bright spots in their respective company’s first quarter results.

Or, to quote Fox CEO Lachlan Murdoch, Fox’s losses would have been much worse had they not been “offset by continued growth at Tubi.”   

This is good news for the future of free TV overall, streaming or otherwise. 

Consumers too seem to be getting on the free bandwagon. A recent report from LG Ad Solutions showed that 7 in 10 viewers preferred free ad-supported services, while a study Tubi did with The Harris Poll showed that two-thirds of viewers regularly use at least one free streaming platform.

So there’s definitely heart for free streaming, especially as prices go up.

One other interesting fact Tubi revealed is that 90 percent of the viewing on its platform is on-demand. That’s a huge number and it's all the more relevant in that Nielsen’s The Gauge has Tubi’s viewing numbers in line with subscription services like Disney+ and Max. So that’s a lot of on demand viewing.

Tubi’s also been doubling down on original programming, releasing three new buzzy series this year—Boarders, Dead Hot and, most recently, the Nicola Coughlan vehicle, Big Mood. All three are aimed at younger, hipper audiences and are helping to establish Tubi as a home for that type of emotionally resonant programming.

Which is not to say that FAST channels are going the way of the 8-track. 

There is still much room for FAST channels across a wide range of genres—news, sports and true crime, for example, all have strong audiences.

And, as our webinar (available on demand here) this week showed, there is also much room for more niche FAST channels with passionate audiences, especially when those audiences are the audiences advertisers are trying to reach.

So there’s that too.

What you need to do about it

If you are Tubi and VIZIO, well done. FAST services attached to media companies and those attached to OEMs are, in many ways, very different businesses, so the fact that both are successful is good news for FASTs overall.

If you are skeptical that FAST viewers like on-demand content as much as linear, look at those Tubi numbers and think again. It’s rarely an either/or thing—preference often depends on mood, timing and the type of content. Point being, it’s good business to offer both and the notion that FAST is just linear is self-defeating.

If you are a consumer and fan of free services, you should indeed be smiling, because chances are, you’re going to start seeing more of them.

Or at least more of the ones you like.

Alan Wolk is co-founder and lead analyst at the consulting firm TV[R]EV. He is the author of the best-selling industry primer, Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry. Wolk frequently speaks about changes in the television industry, both at conferences and to anyone who’ll listen.

Week in Review is an opinion column. It does not necessarily represent the opinions of StreamTV Insider.