Apple, Paramount In Streaming Bundle Talks As Ghost Of Cable Revives

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Apple and Paramount are in early discussions to create a bundle of their undersized streaming services, as both companies try to stabilize subscriber churn and create a more compelling consumer value in a highly competitive sector.

The possible tie-up is the latest example of the Great Rebundling, the seemingly inevitable outcome as media companies bend to the thermodynamics of streaming, trying to conserve tighter resources, retain audiences, and build sustainable businesses. Rebundling can solve some of the complexity consumers face, while stabilizing business operations. The Apple-Paramount talks were first reported in the Wall Street Journal.

The news buoyed share prices for both Paramount Global (up almost 10% on the day to $15.78, its highest price since late August) and Apple (up 1.29% for the day to $191.21). What a possible deal is not, however, is a resurfacing of the cable bundle, as some might suggest.

For one thing, neither Apple nor Paramount offers anything like the breadth of traditional cable, though both have added live sports, and Paramount has added news content. Even adding the services together would comprise only a modest portion of all the series and features available.

An Apple-Paramount tie-up promises a better range of programming both new and old, probably at a better combined price, though it’s still part of a fractured post-cable universe that splits programming across more services than consumers seem willing to pay for.

Streaming services are nonetheless better in many ways than their cable predecessors, avoiding headaches such as high prices, lengthy service contracts, limited flexibility, easy signup and cancellations, and too many channels customers don’t want.

But making it easier to unsubscribe leads to a different problem: churn, as customers sign up and cancel as often as monthly to catch hot new shows, then save money. Apple TV+ and Paramount+ have some of the industry’s highest churn rates, more than 7%, according to Antenna Group estimates.

Streaming services have proliferated the past four years, further contributing to the traditional cable bundle’s decline. But the rise of streaming hasn’t paid off in quite the ways either media and tech companies nor investors anticipated.

Apple’s TV+, despite hits such as Best Picture Oscar winner CODA and Best Comedy Series Emmy winner Ted Lasso, remains far less consequential than just about everything else the tech giant has created, with a user base variously estimated around 20 million subscribers. Apple does not report those numbers publicly.

Paramount Plus has done a better job attracting viewers, thanks to Star Trek, Tom Cruise’s Top Gun and Mission: Impossible franchises, and Yellowstone universe creator Taylor Sheridan. But the service remains undersized, as does its parent company, whose market capitalization remains at just over $10 billion.

Other than Netflix, just about all the streaming services have lost billions of dollars on their streaming services. That paucity of financial success has set off a search for solutions beyond cutting programming and laying off workers.

One option most services are now pursuing involves bundling with other services in a package that usually brings a bargain price while giving consumers more reason to stick around. Disney does its own versions of bundling, with Disney+ and Hulu together, and with ESPN+.

Verizon has been a pioneer in bundling, offering a build your own approach through a market that includes many streaming other subscription services such as Spotify and meditation app Headspace market. It also offers a pairing of Netflix and Warner Bros. Discovery’s
WBD
Max.

Debt-burdened WBD also is licensing older HBO series such as Six Feet Under to Netflix. The company just launched a sports add-on package on Max for which it will begin charging an additional $10 a month beginning in January.

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