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The Even Skinnier Bundle: OTT Apps Partner Up Ahead of Coming Glut

It looks like every company trying to sell online streams of video and music just noticed we’re about to have a lot more competition for viewer eyeballs and dollars. The initial response by many companies was Peak TV, making more and more high-end TV shows to capture audience loyalty ahead of the OTT future.

The latest strategy, however, seems to involve pairing off and partnering up, trying to create irresistible deals that will get more subs in the door. Not incidentally, it may keep those subscribers around for the long haul, even as other tempting options emerge. Just consider these bits of news from the past several days:

  • Hulu and Spotify are offering a joint bundle, originally available only to students. For $12.99, about double the student price, you get Spotify’s ad-free music along with Hulu’s light-ads TV offering. Some 30 million songs, original programs such as Emmy winner “The Handmaid’s Tale,” plus most major recent TV shows with some ads, seems likely to draw a lot of interest. The only impediment is the many strings on the offer’s availability.
  • Philo, a student-focused service that provides cheap access to some pay-TV channels, will roll out apps on iOS and Amazon Fire for a broader consumer audience this summer, with more platforms to be added. The $16/month service provides access to a lot of second-tier channels such as Comedy Central, the Food Network and TLC at a price far below competing virtual MVPDs such as YouTube TV. That bargain price means no sports, no news channels, and no local affiliates. Philo, named for one of TV’s original inventors, seems bent on reinventing it, though the list of what’s not included for that bargain price limits its appeal.
  • Speaking of HBO, Hulu is deeply discounting the price of HBO’s add-on channel for its Live TV skinny bundle, just ahead of Season 2 for “Westworld.” The $4.99/month price, $10 less than normal, is good for six months. HBO owner Time Warner also owns 10 percent of Hulu.
  • MoviePass, what I call Netflix for movie theaters, announced a promotional partnership with the music-streaming service of struggling station owner iHeartRadio. The deal, available for “a limited time only,” provides four movie tickets per month and a three-month trial of iHeartRadio All Access.
  • Comcast has deepened its integration with Netflix on its Xfinity cable box, making Netflix more like another premium channel on Comcast’s service. Customers buying Internet, voice and video services from Comcast will be able to get Netflix, and even pay for it through Comcast.

These are hardly the first such bundle deals out there for online streams. Various mobile companies have been throwing in free Hulu, Netflix and HBO for a while now. Should the AT&T-Time Warner deal go through, expect that to accelerate dramatically, both by AT&T (which gives away HBO for its top-level service tiers) and AT&T competitors.

And some of these deals, such as the Hulu-HBO offering, are really designed as short-term promotions. That said, I’m guessing the MoviePass-iHeartRadio deal, while putatively for a limited time, runs for much longer should it drive subscribers for both sides.

iHeartRadio owns the largest U.S. radio station group, but recently filed for Chapter 11 bankruptcy, thanks to the debt load from a 2008 leveraged buyout. Just before the filing, John Malone bought $400 million of iHeartRadio debt while proposing that Sirius-XM, the satellite radio unit of Malone-controlled Liberty Media, sponsor iHeartRadio through Chapter 11 in exchange for a 40-percent stake.

For its part, MoviePass has been losing lots of money while it aggressively builds subscriber numbers and scale. The company plans to use all the subscriber data it’s collecting to sell movies it owns, along with connecting users to restaurants, bars and other pre- and post-movie experiences and opportunities.

If the deal helps MoviePass and iHeartRadio know more demographic data about their shared users, the promotional bundle could be a home run in terms of advertising and marketing opportunities.

More generally, even the short-term deals are about getting subscribers in the door both for now and for the long haul. It’s going to be an extremely crowded field of subscription services begging for consumer interest over the next few years.

We’ve already seen lesser groups of OTT services partner up in ventures such as VRV, which offers several nerd-friendly channels such as Crunchyroll, Cartoon Hangover, Rooster Teeth and DramaFever. It’s useful to note that VRV comes from Ellation, owned in turn by AT&T and Chernin Media through their joint venture Otter Media. Does that presage additional partnerships in an AT&T-Time Warner partnership?

A recent Diffusion Group study predicted every “major” pay-TV channel and broadcast network will have its own OTT offering by 2022. I’m not sure it’ll take that long, given that some of those services are already arriving.

ESPN+, Disney’s first OTT streaming-video app launched last week for $4.99 per month (or $49.99 per year). Unusually, American Express is “sponsoring” a 30-day free trial of the service.

ESPN+ should grab a nice share of the available OTT subscription dollars (last estimates I saw were that 20 percent of cable subscribers watch the channel, making it one of the last reasons some continue subscribing to pricey traditional pay-TV bundles).

Next year, Disney is rolling out a separate streaming service for all its ABC, Freeform, Pixar, Marvel and Star Wars content. Oh, and if that $52.4 billion Fox deal goes through, Disney will own 60 percent of Hulu too. It’s not hard to see additional bundle deals coming that offer ESPN+, Disney+ (or whatever they call it, especially if it’s plumped up by all that FX, Fox Searchlight and similar grownup content) and Hulu.

And we still have questions about what Apple will do with those 12 episodic shows it has commissioned from big names such as Reese Witherspoon and Ron Moore. Those shows are expected to be available as soon as next March.

A dozen premium shows, 30 million songs, and a recently launched music-video section don’t seem like enough content to make two subscription services, yet are more than anyone else (except, arguably, YouTube Red and in its own way, Amazon) has stuffed into a single service.

Reports this week suggest that, unsurprisingly, Apple will turn its recent acquisition of the all-in-one magazine subscription service Texture into another subscription offering for high-quality magazines.

Is it possible that Apple, once again, might go its own way, and turn Apple Music and Apple News+ (as one possible if unlikely name) into a one-price bundle of its own, called something like Apple Media?

Does that turn Spotify into the next acquisition target for Verizon, AT&T, Comcast or Disney? Does it make YouTube Red up its game? Will Amazon do more to promote the content it delivers through Prime (my discussion last weekend with my mother about all the shows and films there for free if she wants them was illuminating)? The drama offscreen might be as entertaining as some of those onscreen.