Member Mailing: First-Party vs. Third Party "Aggregator 2.0" Bundles
The recent Outside+ bundle from active lifestyle publisher Outside highlights some real challenges for streaming services offering first-party “aggregator 2.0” bundles
Key Takeaways
- With the Amazon Fire-Peacock distribution deal, every legacy media streaming service has now signed a Co-opetition agreement
- But, instead we are seeing more chatter about an “aggregator 2.0” bundles, which bundle streaming with gaming, music, shopping, etc.
- There are two types of “aggregator 2.0” bundles: those that offer first-party services (Apple) and those that offer third-party services (Verizon)
- Third-party bundles (Verizon) may be better positioned than first-party bundles to help streaming services scale
Three bets on bundling emerged in the marketplace in H1 2021:
- Streaming bundled with gaming, music, shopping, etc. (Netflix, Amazon, Apple and Verizon)
- Streaming bundled with other services with economics dictated by platform Channels models like Amazon and Roku (Mic Drop #33: Prime Day Is a ”Massive Dry Run” Towards Amazon Channels Bundling), and
- Streaming bundling through traditional linear cable B2B bundling (Member Mailing #263: The AT&T-Discovery Merger's Questionable Bet on Rebundling)
Bet #2 is an example of Co-opetition, which highlights tensions between tech platforms and legacy media companies in the streaming marketplace. Back in February I wrote about why Co-opetition outcomes are best for SVODs and Amazon and Roku, but offer inherent disadvantages to emerging legacy media AVODs.
Bet #3 is also an example of Co-opetition, but where a bundle of Warner Bros. Discovery streaming apps get more reach and less churn via Amazon and Roku.
But, Bet #1 is not Co-opetition. Rather, it is an “aggregator 2.0” bundle, which offers “the ability to personalize offerings like never before, mixing and matching television, news, e-commerce, gaming, health, and any other service that charges a monthly or annual subscription rate.”
Now that Comcast/NBCU’s Peacock and Amazon have finally reached agreement for distribution on over 50MM Fire TVs and Fire tablets, every legacy media streaming service has now signed onto some form of a Co-opetition agreement.
But the “aggregator 2.0” bundle is still new. It is, in some ways, a digital offering reflecting the PARQOR Hypothesis, bundling various first-party services. So, it is notable that all legacy media companies excluding Disney are unable to offer this type of bundle (and Disney has opted to allow Verizon bundle Disney+ with third-party gaming services).
When a legacy media company does offer a bundle that makes streaming a value-add - like the recent Outside+ bundle from active lifestyle publisher Outside - we learn that the first-party “aggregator 2.0” bundle faces some real challenges.
“Aggregator 2.0”
A recentConsumer Subscription Economics Reportfrom Lazard provided a helpful summary on “aggregator 2.0” bundles in the marketplace, highlighting “Cross-Firm Bundling” and “Single Firm Multi-Product Bundling”, in particular.
The value proposition for the consumer is the same ...