Is it time for streaming TV to rethink monthly billing?

What characteristics define the streaming TV revolution? The welter of content on offer? Big budget TV shows and binge watching? Perhaps th emost important is price point and consumer flexibility? The rise of Netflix led to a dismantling of the pay TV model from annual contracts at higher price points to low-cost monthly contracts. This significantly widened the addressable market of those who could pay for TV content. Without this, the streaming TV revolution may have never happened.

However, business models do not always stand the test of time – especially when the market matures and the economic circumstances change. What was right for growth may not be right for retention. This can also be said for when a business moves from a focus on capturing as much of the market as they can to transforming those customer relationships into sustainable profits.

It is no secret that streaming TV is at an inflexion point. The mindset around boardroom tables is about delivering profitable businesses with stabilised recurring revenues. With that should not only come are-appraisal of how streaming TV services market themselves, but how they monetise their services. At MIDiA, we have been assessing what levers streaming TV services can pull to achieve this at a time when consumers are grappling with the cost-of-living crisis. Our conclusion, as part of our newly released report on streaming TV bundles, is for the industry to begin weaning itself off monthly contracts and move towards annual offers that provide greater stability.

Bundling can help accommodate this change by providing greater choice and discounted pricing if consumers commit to longer contracts. A middle ground between new and old, where consumers can pay a monthly price but commit to a year could be how subscribers and streamers find a model that works best for both parties.

Of course, this begs the question: is this just another example of how the video market is shifting back to the pay TV model of yesteryear? The answer is that while it may appear that way, the variety of bundling techniques on offer means a return to pay TV is not possible. MIDiA’s new video report, “Bundling 2.0 – pivoting the cost-of-living crisis into a cross entertainment growth opportunity”, provides a comprehensive analysis that weighs the risks and rewards of the bundling landscape now, and where it is heading. This is not just confined to video. The future is cross-entertainment, so music, live service games, and interactive experiences will form part of this evolving bundling opportunity.

After disrupting the market, streaming TV must now secure its future. A re-think of how these services are monetised should be among the priorities. This report helps tackle these questions head on. Please get in touch if you have further questions: ben@midiaresearch.com; tim@midiaresearch.com.