I’ve written extensively about the growing trend of unbundling happening to the cable TV bundle. Voices in tech keep highlighting the cyclical nature of this trend where everything that was once bundled becomes unbundled only to be bundled again. The important observation we cannot escape is the inherent value in bundles. Bundles work for a variety of reasons but mostly because once a company has a billing relationship with a customer, it is effortless for them to layer value. So while we are currently in a partial phase of unbundling TV content, the reality is it will all become bundled again quite quickly. But the interesting new wrinkle I see coming is the rise of what I call the super bundle.
The Future is Super Bundles
In part, this observation comes on the heels of the broader observation I wrote about last week where big companies keep getting bigger and stronger because of mega-mergers. As these companies get stronger, they become dominant players sitting at the center of the consumer relationship. As the dominance and influence of these companies grow and their control of the consumer relationship grows, they will inevitably become players in the super bundle arena.
So what is a super bundle? When you look back at how things have been bundled before they tend to be limited to specific things. You bundle insurance, healthcare, entertainment services, information services, communication services, etc. A super bundle emerges when a company is in a position to provide a bundle that includes a range of all these services. It may not include all these services, but it is a greatly expanded bundle then what we have been used to historically.
Consider Amazon as an example. A Prime membership offers benefits and discounts on commerce, media and entertainment, information and even local commerce as Prime members now get discounts at Whole Foods. Amazon is an example of a power player in consumer relationship and can sit at the center as a super bundle. Amazon started simply with Prime offering discounts and free two-day shipping and over time expanded that offering to layer more and more value built into their bundle. I expect this to continue, along with increasing the cost of Prime or different Prime tiers, as Amazon will layer even more value into a Prime subscription. Perhaps next will be a bigger streaming TV bundle or broader bundle to subscription news where subscriptions to big news publishers are included in the costs.
Apple is another company I believe is poised to offer a super bundle. Apple’s position of dominance when it comes to the customer relationship is a reason they are well positioned to provide a broad bundle of content and services. Apple already has one of the largest, if not the largest, collection of credit cards on file from their customer base. This direct billing relationship, at a global scale, is a primary reason every company with a transaction-based business model is flocking to Apple’s platform. Both Apple and Amazon have built a platform that consists of enormous portions of the worlds most valuable customers, and this is a primary reason they are well positioned to offer these super bundles.
Apple’s bundle may have some overlap with Amazon’s in areas like information/news content, entertainment, but can differ as areas like health, financial services, and even hardware (bundling iPhones, Apple Watch, iPad, Mac, Apple TV, etc.) as a subscription as well. The range of things a company like Amazon or Apple can offer in their super bundle is practically endless.
Certain companies are better positioned to offer super bundles than others. The commonality of companies I think can succeed are those “platforms” where consumers are used to paying for things. For that reason, I do not think Google or Facebook are examples of platforms who are well positioned to succeed in offering a super bundle.
A big question is what happens to the standalone media and entertainment firms like Netflix in this future. Part of me believes Netflix will have to either become a super bundler themselves or they will need to be integrated with a super bundle offering in order to sustain long-term growth. This trend could grow faster than Netflix anticipates and leave them no choice but to be a part of a larger bundle.
Legacy Bundlers Will Fight To the Bitter End
Those in control of certain bundles today, and I’m mostly thinking about companies like Comcast, AT&T, etc., who bundled things like cable, Internet, and telecoms will fight this to the bitter end. They may hike up costs when you cancel one part like they do today where they boost the cost of the Internet if you cancel cable TV, but these efforts will be short lived. While we can argue the company who provides you Internet is in a position of dominance. But, there is an interesting scenario on the horizon where a company like Amazon, or Apple could even be in a position to offer Internet services as well but I’ll leave that for a later analysis.
Another hypothetical is how these backbone/infrastructure providers engage in the merger mania I wrote about last week and thus try to buy/control the entertainment landscape. If telecoms or cable companies capitalize in the consolidation of the media and entertainment space, which is happening as we speak, as they seek to fight this trend and sit in the driver’s seat controlling the Internet backbone and premium media/entertainment.
There is tremendous value in the super bundle because of the value of one single bill. Every bit of consumer data I’ve ever seen on this matter continually confirms that consumers prefer one bill to many and the super bundle will take this to an entirely new level. There is a lot of game theory to my thesis but I’m certain these super bundles are coming. The only question is who and what exactly we will be paying in the future.