I’ve always been fascinated by metamorphosis—a tadpole becomes a frog, or a caterpillar becomes a butterfly. Why do living creatures need to change form as they mature? Do environments demand constant development? What are the benefits? The streaming industry is undergoing a similar process that has me asking the same questions. As the transition from our linear and analog world accelerates, competition in the direct-to-consumer (D2C) industry grows at an equal rate. To build and maintain competitive advantages in a world of finite consumer spend, major players are realizing that television series and films will not be enough to guarantee interest. Instead, the goal is to create all-encompassing digital ecosystems that bundle entertainment with broader consumer services to keep customers within their digital ecosystems for as long as possible.
The move has unfettered programmers and distributors from traditional ways of doing business, allowing them to package and deliver entertainment in innovative ways. Streamers backed by Big Tech (Amazon (AMZN) Prime, Apple (AAPL) One and YouTube), in particular, have bundled content and utilities such as retail, shipping and games into one ecosystem.
“The shift toward bundling content with broader consumer services reflects a larger trend in digital media—content alone is no longer enough,” John Mass, president of Content Partners, a firm investing in entertainment assets, told Observer.
Yango Play, a small service launched in the Middle East and North Africa (MENA) region last year, may serve as a microcosm for the future of streaming bundles. It offers a mix of Hollywood and local market content, music streams, curated playlists and mobile games. What sets it apart is the gamified app function Yango City, which rewards users for activity across different platform verticals, allows them to see the activity of friends and family and compete for various in-app rewards and perks.
This approach performs the important function of moving streaming from a passive experience into an active one, creating a social community in the process. By giving subscribers a sense of direct control and ownership, Yango Play points toward a new model of media consumption that encourages more frequent platform engagement and socialization.
The platform’s strategy, along with the templates established by Big Tech, suggests that successful media consolidation is less about smashing together expensive premium content libraries and more about strategically coupling complementary and overlapping services. This hits on a key insight: consumers aren’t necessarily seeking more content but better, more engaging experiences.
Subscription fatigue calls for a new kind of product
Subscription fatigue is taking its toll on consumers in a volatile economy. Price sensitivity has never been higher after nearly every major subscription-video-on-demand (SVOD) service jacked up prices over the last 18 months. John Harrison, who leads a team at EY identifying disruptive opportunities in media and entertainment, emphasizes the importance of subscriber retention in a time of unchecked churn. “Reducing subscriber churn is crucial for the profitability of streaming services. Retaining subscribers poses a challenge as consumers can easily switch services on and off at their convenience,” he told Observer.
To combat this, Harrison notes that providers are exploring various bundling strategies. The most common is combining D2C services at discounted rates, such as Comcast’s StreamSaver bundle (Netflix (NFLX), Apple TV+, Peacock) and the Disney-Warner Bros. Discovery (WBD) bundle (Disney+, Hulu, Max). The other approach is creating broader lifestyle bundles incorporating e-commerce, music, travel and more. For instance, Verizon is bundling Netflix and Max with its phone service, and Spotify is reportedly exploring a new package that would include concert tickets.
While Amazon, Apple and Google are consistently mentioned as frontrunners in the bundling ecosystem race, industry experts emphasize that success in this space is more nuanced than it might appear. “Viewers’ habits have changed. Content has evolved. Traditional media companies that rely solely on content subscriptions face a steeper challenge,” Content Partners’ Mass said. “Consumers no longer default to network television or standalone streaming services. They have an endless array of digital content at their fingertips.”
The streaming landscape is not a zero-sum game. Netflix undoubtedly dominated D2C’s infancy, but the next phase is about securing secondary subscriptions via content value propositions and pricing strategies. “Streaming platforms that own their content libraries, such as Netflix and Disney+, have a competitive advantage,” Eli Goodman, CEO and co-founder of Datos, told Observer. “Unlike traditional cable companies that primarily act as distributors, these platforms function as both developers and distributors, allowing them to control distribution, pricing and usage rights.”
Each major player brings distinct advantages to the table. Amazon and Apple leverage their substantial market power outside entertainment, while YouTube benefits from Google’s technological infrastructure. Disney+ draws strength from its beloved brand power across several divisions, especially theme parks and merchandise.
However, not all assessments align. Iryna Chuhai, chief marketing officer at the content production hub WePlay Studios, offers a contrarian view on Netflix’s position in this new bundled ecosystem hierarchy. “The weakest is Netflix. As for now, the company does not have much to offer except content and some games based on existing content IPs,” she told Observer. In the long term, this could be a thorn to the market leader.
A.I. will define the best streaming ecosystems
When we cast an eye to the future, A.I. is unsurprisingly a major talking point in defining the next phase of streaming bundling and ecosystem creation. Mithilesh Ramaswamy, a cybersecurity A.I. expert, predicts that “A.I.-powered hyper-personalization will define the best streaming ecosystems—predictive recommendations, A.I.-generated media (e.g., synthetic influencers, virtual concerts), and interactive content (A.I.-powered storytelling) will create deeper user engagement.”
If that’s the case, it provides Google, Amazon and Apple with even greater advantages, given their lead in A.I. over legacy media companies. But this power comes with crucial ethical considerations. “A dystopian future where corporations control every minute of our time, placing us in their ecosystems, might be a reality if users get the best value for the money paid,” Chuhai said. “However, the more powerful these ecosystems become, the faster the antitrust and data collection concerns will grow.”
If metamorphosis teaches us that our first form is not necessarily the optimal one to thrive in a competitive environment, then the same can be said for the streaming industry. If content is no longer enough to guarantee success, then companies seeking sustained success may need to evolve their streaming services into effective bundles and ecosystems. This will require each platform to balance consumer value, quality content and technological innovation. We might also throw in a bit of cross-company cooperation for good measure. Whichever streamer can best combine in-demand programming with personalized experiences and convenient services will be able to provide the best sense of ownership and community.