Disney has figured out an ingenious way to jump-start its streaming subscriber growth—give people less of a choice! Since late December, Disney has automatically included Disney+ and ESPN+ in one of its Hulu offerings, at a slightly higher price than it previously charged, we learned today. Ingenious! It’s a reminder that the customer-unfriendly DNA of the television industry still lurks in the genes of companies like Disney.
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There’s only one reason you take this action, and it’s to juice subscriber numbers. The strategy is working so far. Disney executives said the bundling—which they called a “strategic decision,” whatever that means—accounted for half of the surprisingly strong North American subscriber additions for Disney+ in the quarter. And sure, it’s a good deal for consumers right now: Even after the price raise, the bundle implies a hefty discount on all three services. But it’s a slippery slope. Forcing people to take services they don’t necessarily want is how the cable TV became a cash-printing machine, before steady price rises eventually alienated so many customers it went into a decline that is still underway.
Still, TV executives across the industry will surely take heart from Disney’s move. There have been straws in the wind for a while that executives at companies like Discovery—which today said it got regulatory approval to buy HBO Max’s parent, WarnerMedia—would like to offer packages of different streaming services. The current arrangement, low-cost services with lots of programming, is a money-losing proposition. Done right, bundling could offer a solution to streaming’s poor economics. But if it is mishandled—and who would rule out that happening!—it may play into the hands of companies like Netflix and Amazon, which tend to follow a more consumer-friendly approach.
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