• by Wayne Friedman , November 18, 2022

High streaming programming costs and possible subscriber declines will force some unprofitable streamer platforms from legacy media companies to possibly bundle their services -- with other competitors' platforms, according to cable TV executive John Malone.

“There may be opportunities for streamers to bundle with other streamers,” said Malone, chairman of Liberty Media, on CNBC on Thursday. ”It's been discussed... amongst various players.”

The main issue, he says, is minimizing the problem of "churn" -- where subscribers on a monthly or periodic basis cancel a service. This can come after a new season of a popular show on a streaming platform is released and viewed.

"You've got to drive down churn and the churn cost I think is going to be an important part of the equation... You're not going to be able to spend a fortune on advertising and promotion." Bundling up a wide number of services -- with a kind of slimmed-down cable TV package -- would keep customers from canceling, according to some executives.

So Malone says direct-to-consumer business executives are probably asking a key question:

“What do I have to add to my stream in order to stabilize it, to make it more difficult for a consumer to decide to disconnect after they've seen a hot show?” He adds: “It may take bundling with something, frankly, other than entertainment programming, maybe sports bundle or maybe, maybe even connectivity service.”

High-profile streamers from legacy TV-media companies -- including Warner Bros. Discovery's HBO Max and discovery+, NBCUniversal’s Peacock, and Paramount Global Paramount+ -- continue to lose money, partly due to high content costs that can run into the billions per year.

Yearly net losses for each of these services currently can run anywhere from $1.5 billion to $1.8 billion. The outlook for profitability might not come for several years, and Malone says this is not sustainable.

Still, he believes Walt Disney’s Disney+ might have the right approach -- bundling different services “internally”: “In other words, have three or four services streaming that you can combine and try to satisfy a broader household.” Disney does this with Disney+, Hulu, and ESPN+.

In somewhat of a different approach, Warner Bros. Discovery is looking to cut costs by merging HBO Max and discovery+ into a single service starting next year. Paramount Global has also been mulling combining Paramount+ with its Showtime streaming service.