And tech is beating media to the punch

By Mike Raab

As consumers bemoan the disaggregation of their favourite TV shows from Netflix into Disney+, HBO Max, NBCUniversal, and other streaming apps, it’s worth remembering that in the past 20 years of media, we’ve seen a continual unbundling and re-bundling of content.  For those paying attention, one comment from James Barksdale, the former CEO of Netscape, has seemed especially prescient in regards to the media and entertainment ecosystem:

“… there’s only two ways I know of to make money – bundling and unbundling” — James Barksdale

Music has moved from bundled (albums), to unbundled (single songs, iTunes), to centrally bundled (Spotify, Apple Music).  News and magazines have similarly moved from bundled (print subscriptions), to unbundled (free digital access), and are currently transitioning back to bundles (digital subscriptions).  We’re also in the early stages of both video games and even movie theatres evolving into bundled, subscription models as opposed to single-transaction businesses.

While cable subscribers once begged to pay for only the channels that they watched, Netflix spoiled viewers by aggregating some of the best TV and film content of all time in a one-stop-content-shop that cost customers a fraction of the price of a cable subscription.

As consumers navigate this shifting media landscape, they’re coming to terms with the possibility that they’ll need to subscribe to more and more services for entertainment.  It’s not unrealistic that your average consumer will be paying regular monthly subscriptions for music (1 subscription), video on demand (2 to 4+ subscriptions), news (2 to 3+ subscriptions), audiobooks and podcasts (??? subscriptions), and cloud-gaming services (who knows?).

If the history of media (or James Barksdale) tells us anything, it’s that there will eventually be a re-bundling of this video content, perhaps in something that looks like Cable 2.0.  Perhaps though, it won’t just be video content that’s re-bundled.  What if instead services across these entertainment categories are bundled and offered to users at a discount?  This seems to be the future that tech companies are strategically planning for.

For comparison sake, here are the current media assets for both media and tech conglomerates across filmed content, music, publications, gaming, and other media:

Note: Not necessarily a definitive list

Media conglomerates currently have a heavy concentration on TV and film studios, cable channels, and filmed content brands, which are historically the most profitable of media endeavours.  Tech companies, on the other hand, have taken more distributed and measured approaches to the media content they’ve become involved with.  Until recently they’ve been unwilling to riskily invest the vast amount of capital necessary to compete with “old media” on original filmed content like movies and TV series.

Tech companies are becoming media companies

Partially driven by Netflix envy, the rest of “FAANG” (Facebook, Apple, Amazon, and Google) have all devoted significant resources and capital to building out their media strategies in recent years.

Who (bundles) the (bundles)?

While tech and media companies fight it out with different content offerings, strategies, and business models, there are also opportunities for the independent market leaders in each category to partner with each other to offer their own bundles and compete more effectively with both tech and media companies.  What would a Netflix + Spotify + Medium / Scroll + EA Access bundle look like?  These services are each focused on one specific area, and can’t offer their content as loss leaders for other business units as Apple, Amazon, Google, and Facebook have the comfort of doing.

Consumers frustrated by the upcoming disaggregation and unbundling of some of their favourite content would be served well to remember a world in which they had to purchase albums at $10 a piece or more to listen to their favourite music, pay an average cable bill of $85 a month, wait for paper copies of their news and entertainment subscriptions, and purchase video games and movies a la carte.  Netflix and Spotify have spoiled a generation with unbelievable value propositions not likely to be seen again anytime soon.  Perhaps the silver lining is that the next re-bundling will be multi-media.