Pay-TV fall prompts unbundling; will streaming services ‘rebundle?’ Nah

streaming services
Like firewood, the value proposition for streaming services is best when unbundled.

Are we really poised on the “Great Cable Unbundling?” It’s inevitable, according to Matt Strauss, Comcast’s point guy on its Xfinity streaming service.

In an interview with Business Insider (subscription required), Strauss said the coming launches of Disney Plus, as well as services from AT&T’s WarnerMedia, Comcast’s NBCUniversal and  offerings from tech giants like Apple, will force even more change as consumers see streaming service options increase.

In fact, he said, the streaming ecosystem poses an interesting case… paralleling the growth of the early cable industry as “every existing network will have to launch some version” of a streaming service,” he said.

As the traditional pay-TV market declines, “a lot of channels will fall out of the traditional bundle,” he said. Several, like one-time cable network Esquire, already have begun, be re-born as streaming channels in what Strauss predicts is the start of a “rebundling of a subset of SVOD services in the future.”

Unbundling is something more than just the pay-TV industry has experienced in the past five years, because it’s something that’s become easier to do. Personal finance, medical care, travel… all have gone through their own “great unbundling.”

It originally was something particularly noted among Millennials. But pretty much all of us now partake in some form. When was the last time, for example, you walked into a “department store” to do some serious shopping? It’s more likely you grazed Internet sites and saw a lot more product.

Pay TV dies, streaming services grow

The move to streaming services has been abrupt. It’s not likely to slow down as the move away from pay-TV increases. This week kicks off earning season for pay-TV operators with AT&T up first Wednesday morning.

The company’s Q2 could be a bloodbath, in terms of subscriber losses from its DirecTV and U-Verse pay-TV services and it’s no guarantee that even its own streaming play, DirecTV Now won’t continue to struggle. Comcast follows Thursday morning – and it, too, is likely to see losses. But, they’ll pale in comparison to AT&T.

Facebook is on tap Wednesday, with Alphabet and Amazon up Thursday afternoon and Twitter on Friday. All told, that group will serve as great indicators for the rest of the industry.

But is there really any doubt where this is going?

By the end of 2018, for example, it was possible to define more than half (54%) of US consumers as being either cord- cutters, cord-nevers, or cord-trimmers, according to the Watauga Group. And, nearly one-quarter (24%) of TV time now is being spent watching streamed content, as opposed to just 7% viewing video on-demand content from operators.

The bottom line

Will streaming service bundle? I think anyone who’s expecting a “great rebundling” of streaming services a la the cable bundle has missed the point of this ongoing consumer revolution against traditional pay-TV bundling.

Like firewood in the photo that accompanies this post, consumers see the best value proposition when streaming services aren’t bundled. They get to pick what looks best to them, without getting stuck with any crap they don’t want.

Consumers have begun to build their own bundles. And they continue to build those bundles around core services like Netflix and, potentially, Disney Plus or a virtual MVPD like Hulu or YouTube TV. But that reliance on vMVPDs is a going to be short lived, because vMVPDs are stuck in a very old business model – that bundle consumers really don’t want.

Those virtual pay-TV services are really just a half step toward the eventual offering of everything a la carte.

Because, consumers, especially in developed streaming markets, really have gone full circle.

What is missing is an aggregator that allows them to aggregate their a la carte selections individually. Technology that allows them to search and discover content and to schedule it according to their available viewing time.

That’s TV 3.0, and it’s coming.

Stay tuned.

Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn