1. Hulu, Spotify And The Start Of The New Bundle™
Hulu and Spotify announced a joint promotion this week aimed (for now) at college students. For just $4.99/month, anyone with a valid .edu address can sign up for ad-free Spotify plus ad-supported Hulu. Since ad-free Spotify is already $4.99/month, they’re basically getting Hulu for free, a $7.99 value.
Why It Matters
This is the start of the New Bundle, something we’ve been talking about for a while. One of the reasons the old bundles have stayed around (no matter how many times Rich Greenfield tweets #GoodLuckBundle) is they’re convenient. Most people don’t like choice or having to manage it. That’s why the whole “one easy bill” thing is huge.
So there’s no reason not to start packaging all the various services together, regardless of medium. If it’s digital and you’re paying a monthly subscription fee for it, it’s fair game.
The obvious Bundlers-In-Chief would seem to be the MVPDs, given that they provide internet access, and we’ve seen some signs of that, as Comcast brought Netflix and YouTube into their ecosystem earlier this year. We were sure that others would follow, given how well that’s worked out for Comcast (increased TV subscriptions, people saying nice things about them) and because there’s no real downside: the MVPD gets greater stickiness, a chance to avoid cord cutting and a way to get users to upgrade their broadband speed. Streaming services get free marketing and access to technophobic older viewers and users get a way to avoid having to change the input device along with a single bill.
But things move slowly in MVPD-land.
That’s why streaming services are taking it upon themselves to set up these deals.
Hulu-Spotify makes sense for so many reasons, too. First off, Spotify is the number one streaming service with younger listeners—it’s kicking Apple Music’s ass 47-14% with that demographic. Hulu has lagged behind Netflix and Amazon but is finally coming into its own, and it’s likely to get a lot of buzz from its breakout series A Handmaid’s Tale which is favored to clean up at the Emmy’s this month.
More than than, Hulu recently launched a virtual pay-TV service, something that they can market to the college students who sign up for the Spotify offer. College students, who don’t want the hassle of signing up for cable (and then cancelling it when the semester is over) and who frequently get internet for free from the university, are a prime market for Hulu Live. The whole get ‘em while they’re young theory.
What You Need To Do About It
If you’re an MVPD, you need to get on the stick and start putting some of these deals together. No reason you can’t offer Spotify or Pandora or even Audible to your viewers. Let alone Amazon, Hulu and Netflix.
Or, as we’ve suggested in the past, you can start putting bundles together with various network SVOD services—sell users broadband plus Netflix, Spotify, Hulu and HBO. The market is wide open and yours for the taking.
If you’re a streaming service, be open to all these bundling opportunities, especially if you’re a smaller or newer streaming service. There’s no real downside and the more viewers you have, the more money you make.
2. T-Mobile Has A Netflix Deal
In light of AT&T’s deal to offer free HBO to mobile customers who sign up for its unlimited data plans, T-Mobile is offering free Netflix to anyone who signs up for their unlimited data plan.
Why It Matters
Look ma! More New Bundling!
And while this may not be as good a deal as the Hulu-Spotify offer (T-Mobile’s unlimited plans are expensive) it’s still an interesting play in that it’s yet another example of the New Bundle.
This one makes sense because users could conceivably use their T-Mobile mobile connection to watch Netflix on their phone or tablet, thus avoiding any sort of broadband connection.
While that’s unlikely to be a primary use case (T-Mobile doesn’t stream video in HD), it does allow for out-of-home viewing and gets the notion of watching TV via a mobile connection into viewers heads. So that when 5G comes along it’s already there, ready and waiting.
What You Need To Do About It
As mentioned earlier, if you’re an MVPD (or a mobile carrier—looking at you guys Verizon and Sprint) you need to get with the program and start putting together New Bundles, combining the services people want and giving them options on which ones to bundle together. It should be pretty easy to set up an algorithm that lets users pick say five or ten services and then come up with a price for them. Because stickiness. And much less churn. (NB: This is a particularly good deal for smaller MVPDs who don’t have a very good pay TV service as it is. Create some hot bundles, maybe throw in a virtual service like Hulu or Sling, and watch the customers roll in.)
And if you’re a subscription service of any sort, remember that mobile carriers are a good partner option. Count the number of times you see ads for this new T-Mobile and Netflix deal, and you’ll know what we mean.
Finally, if you’re an advertiser—New Bundles can work for you too, as a sponsorship opportunity. Imagine if say Pepsi sponsored free Spotify for T-Mobile customers and the app was a Pepsi logo.
Think about it.