Supply Chain Barriers to Streaming's Great Rebundling
Throughout much of the last 9-12 months, stories about a “Great Rebundling” soon to come or already begun have been hard to miss, with prophecies of all-encompassing über bundles of once-disparate streaming services with cable-high price tags and accompanied by massive anticipatory sighs of relief of warnings of impending back-to-dark-ages doom accompanying these predictions, depending on who was doing the predicting. Some found much to celebrate, the sort of cowering crawling back to relieve the psychological burdens of ill-considered cord-cutting (not so much from the cord-cutters themselves as from the pundits who doubt the masses’ ability to withstand such a paradigm shift).
Others saw it as an inevitable and necessary corrective to too much OTT fragmentation and too many subs to pay for or keep track of. Still others just saw themselves as documenting an emerging trend, and extrapolating based on established alliances of demonstrated value like Disney/Hulu/ESPN, struggling-toward-completion ones like HBO Max-Discovery+ and the more recently announced Paramount+/Showtime, carriage deals like one that brought Fox’s Tubi FAST service into the Verizon FIOS universe, or potential next steps for Amazon’s ever-expanding video services marketplace (however long delayed). HBO Max-Discovery+ has arguably had the most interesting saga so far, with issues ranging from choosing a name to acknowledged embarrassment over unresolved UX deficiencies just two of the problems continuing to hold it back.
Return of the Cable Package?
Typical headlines declared “You Hated Your Cable Package. Your Streaming Services Are Bringing it Back.” Predictable objections were obvious and valid: For years, cable customers had paid massive monthly fees for services consisting mostly of channels they never watched; kitchen-sink streaming subscriptions would bind streaming users to the same unwieldy, unaffordable bundles. They just wouldn’t go for it. And how nicely would long-time competitors ever really play together in cross-company bundles? NBCUniversal provided just one example of a service who made their case to multiple traditional adversaries and just couldn’t get a deal done.
So we’re well aware of the barriers and objections to a great rebundling from the consumer’s perspective, as well as the business and IP impediments as the larger content companies are likely to see them, as well as how they’ve more or less indicated they see them so far. Many industry experts nonetheless expect it to happen. As Fox Sports EVP B.J. Elias said on a panel at Streaming Media West last November, "Ultimately, I think we'll start to see some form of rebundling of streaming services. I don't think people like dropping into five different siloed user experiences to get content. I think that's where the platforms can play a role in both giving you a bundled discount to a collection of services and providing unified navigation and search, Sounds a lot like Pay TV, right? Eventually, it will migrate back to that as an option, but the platforms will certainly have a large role in it.”
It’s All About Infrastructure
But this week I spoke with Dan Goman, CEO of media supply chain solutions provider Ateliere, who says there’s a far more significant obstacle to making such rebundling initiatives work, and it goes deeper than pricing and bundle bloat and starts well before the content reaches consumers. The issue, he says, is infrastructure deficiencies and inefficiencies that are compounded and magnified by efforts to launch headlong into new streaming initiatives without consideration for what’s actually being combined well down the tech stack to deliver merged content offerings to viewers.
Goman acknowledges that from a consumer perspective, the streaming world has reached a crossroads where with fragmentation and cost, something has to give, so this potential rebundling course the industry seems to be finding itself on isn’t entirely ill-advised. "When I started in this business many, many years ago with the intent and with the idea that cable bundling would be undone, it was super-early in terms of streaming. But the promise that streaming brought was you only pay for what you want, when you want, and consume it, how you want it, when, where, and how. You have full control. You didn't have to buy this massive cable bundle that was super-expensive and you had 300 channels, but you're only watching seven. As much as we hated that, it seems like with the explosion of streaming services right now we're at, we're at the point where consumers are rethinking that. And there's plenty of studies to show that at least in North America, majority of consumers are in fact pining for the good old days, or at least a bundle, because there's just too many if you buy Disney+ here, Paramount+, et cetera. With all these plusses everywhere, it adds up. So you're already back at the price of the cable bundle and perhaps higher in some cases."
But the way content companies are approaching rebundling strategies at the current time, he argues, simply isn’t going to work.
"When a lot of these [bundling] announcements started happening last year and the year before," Goman says, "I noticed a lot of these companies saying 'We're streaming first.' I instantly thought, 'Okay, well what does that mean for the infrastructure?' Because the infrastructure was not designed to handle a streaming-first business. That's just the reality. And I think a lot of industry insiders--specifically technologists--were looking at this and saying, 'Okay, this is gonna be a heck of a lot of work.' And that same reaction, of course, was prevalent internally to these companies as they were looking at their current tech stack and what they were being asked to do."
In many cases, Goman argues, simply having the technical staff to meet both the increased demand for streaming over the last three years, and the heightened demand to deliver content through new channels is something content companies fail to consider as they pursue these new deals. "For the last couple of years, we've been in conversations with everyone and anyone, and they're all telling us, 'Look what streaming did to us. It effectively broke the supply chain. We're being asked to do more with less, with no more headcounts being approved. It's literally the same tools, the same processes, but now we have to pump out content for our own owned and operated, if you will, and then content on behalf of Netflix, Amazon, et cetera. The amount of pressure that was being put on these various different groups that were responsible for producing, and of course delivering the content was immense. So there are massive implications to a streaming-first business initiative for the technology stack," he continues. "And I think what we're seeing here is just the first step of, for instance, Paramount looking at all these disconnected business units, disconnected brands.”
Ultimately, he says—speaking more generally as opposed to commenting on Paramount or any one content company in particular—"if you're looking at it from a supply chain perspective, these companies don't have one harmonious, unified global supply chain. It's many, many, different supply chains and a hodgepodge of tools. fragmented, making it super inefficient. So there are plenty of opportunities to consolidate, streamline, and then work towards what I think should be the goal. And that is one unified supply chain across everything. And that’s the only way to be successful in a ‘streaming-first’ world."
Unifying the Supply Chain
The key problem is that streaming services that may be sold together or viewed under a bigger umbrella like Amazon or some other marketplace or bundle aren’t really playing together the way they should, regardless of how it appears to the consumer, and there are costs to that sort of down-the-chain inefficiency.
"They're really not playing together at all," Goman says. "It's all separate groups, separate tools, separate everything, and that creates massive overhead, operationally and financially. And we try to make our customers aware of that. I was talking to one large company recently and they were saying, 'At last count we have 10 supply chains and we're still counting.' So I think they realize that a unified supply chain makes sense. But when you have all these different services that you're operating and all these various different platforms that you're providing service to, it just becomes unwieldy for you to try to do this with this fragmented approach."
Coordinating Data Collection
One further challenge that faces companies as they attempt to implement and monetize bundles is collecting and leveraging actionable data without fully integrating their services. "Data is probably the area most important to the success of these businesses going forward,” Goman says. “Entire businesses have been built upon data collection. Some in the streaming world are further along than others. I think Netflix has done a great job of collecting data. Amazon is prolific and they've got a great set of user viewing data, which they won't share with anyone, besides little pieces as we all know.
“But the more fragmentation we have within the supply chain,” he continues, “the harder it is to collect a complete picture of what things look like that would make you understand what's currently going on with your service—and then, more importantly, be able to make decisions that are driven by the data.When you're talking about running these global streaming services, the ability to collect data and understand what's going on both within your supply chain as well as critically on the user side of things means the difference between success and failure. And so, again, when you don't have a unified supply chain, when you don't have a common tech stack, you can't build a complete picture so that the people that are running these services understand what's going on and are able to make the right decisions. It’s all about data in the end.”