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Bundles of Joy

There is absolutely room for bundles in media, as long as they represent transparent value (price or convenience) for the consumer.


Yesterday, Hulu announced that it would be offering a bundle of Hulu/Showtime to its customers. Many have poked fun at the fact that digital entities, who have often rallied against the economics of traditional media, are happy to see the bundle making a comeback. The consumer should be happy, as well.

Traditional media has long argued that the bundle is the most cost-effective means for a customer to get the content they want. While in theory that might possibly be true, it is blatantly false given the current construct of the cable and satellite bundle. The cable bundle today delivers you lots of stuff you don’t want, which is often subsidized by your willingness to pay for the stuff you might actually like. Most people watch very few channels, yet pay for more than 500 of them.

The awesome thing about the Internet is that it tends to rectify these value imbalances. It is increasingly hard to add no value to people in the world, yet still get paid. We don’t buy the album anymore, we buy the song. We don’t read the paper, we read the sections or columnists we truly value. We can use a car service for a single ride, not a four-hour minimum. We have transparent pricing on most everything we buy to ensure we are getting the best deal.

The cable bundle has long protected the weak in the sense that it obfuscates our ability to pay for certain programming. There are many channels that are paid for by 80 million homes that provide no value to all but a few hundred thousand of them. There are other channels that provide increasing value, but get paid far less than the core fan bases might be willing to pay for it. This dichotomy is doomed for failure in an always-on, always-online, transparent world.

Yet we should all be happy with the Hulu bundle. Bundles by themselves are not inherently bad. Most of the time they are a convenient way to purchase everything from fast food to a vacation. A lot of the time they actually save you some money in doing so. There is absolutely room for bundles in media, as long as they represent transparent value (price or convenience) for the consumer. That is what the Showtime/Hulu bundle represents. It is easy to imagine other services — whether they emanate from traditional media companies or companies like Defy — being added to the bundle, as well.

In a lot of ways, the new skinny bundles provided by players such as Sony and Dish represent another step forward. Although they are not quite transparent, they clearly represent a pruning of the weak and an ability to hit the reset button on what audiences truly value. They also provide an opportunity for relevant digital brands to be represented, thereby changing the value equation for an entirely new generation of audiences.

There are channels on YouTube, like Smosh and The Fine Brothers, with millions of subscribers and viewers watching hundreds of millions of videos per month. Those channels have demonstrated a stronger ability to drive broad consumer value than a large number of existing bundled channels.

Lastly, these new bundles have the ability to provide more dynamic bundled pricing on the content that you actually watch. Agreements with some providers may prohibit this in the short run, but it seems likely that truly customized offerings will ultimately become a reality.

Oddly, when all is said and done, we might actually end up paying more than we do today for our customized offering. However, we will also likely get more from the providers we enjoy, and feel better about it. For example, HBO Now might go up in price … but you can download their originals on your devices, as long as you subscribe.

The amazing thing about the world we are headed into is that it provides the opportunity for value to be properly attributed and rewarded. The rise of programmatic and the “Influencer” as a sponsorship vehicle has already shown how quickly this can translate into media advertising dollars. The bundle might move slower, but the times, they are a changing.

Keith Richman is president of Defy Media, a leading media company for the “cord-never” generation. Reach him @keithrichman.

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