David Zaslav, CEO of Warner Bros. Discovery, says
he was perhaps the earliest proponent of bundling. He started to talk about it two years ago.
Now, Zaslav might be thinking about some other changes.
Currently, Warner Bros. Discovery is participating in assorted bundling partnerships -- through Venu Sports (with Walt Disney's ESPN and Fox Corp.) as well as entertainment bundling
(Max being packaged with Disney+ and Hulu).
With all these deals, Zaslav -- who spoke at a Bernstein Research event last Thursday -- believes WBD is at the forefront of where
streaming is headed.
But Zaslav also addressed something else that is key in this discussion. One of these deals, with Walt Disney, has the potential to see the average revenue per user
-- otherwise known as ARPU -- rise overall for both companies.
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“Because we are doing it directly, the ARPU could be compelling,” he says.
Zaslav was hinting
that -- at least initially -- it might avoid making deals with third-party streaming distributors, such as Roku, Amazon Fire TV and others.
The ARPU factor in Walt
Disney-Warner Bros. Discovery deal does not mean consumer pricing will be higher.
The whole point of bundling is to get consumers to buy in for the long term -- not to drop any streamer
platform on a month-to-month basis. With two major premium streamers working in tandem, analysts suggest there will be less "churn."
What does this mean? It gets back to the promise of
streaming's original intention -- that is the business of direct-to-consumer(D2C) video platforms. Focus on the word "direct."
Zaslav's proclamation of going "direct" brings up an
important historical point that has plagued legacy TV network owners in dealing with traditional video distributors -- cable, satellite, telco, and virtual. This comes from having to share
distribution revenue with those companies.
So, down the road, what contract disputes may arise from new streaming distributor future deals with consumers? This may become more complicated,
given the omnipresent nature of access for streaming platforms among many distributors.
We then wonder if those distributors (Roku, Amazon, Apple TV, Samsung, Vizio) would need to reconfigure
their consumer premise -- not only by enticing consumers with bundling discounted deals, but also making consumers commit to year-long contracts.
Welcome to the new school of streaming -- same
as the old school.