A very interesting bit of research came out about Amazon’s ability to drive third-party subscription content. Variety published data from TDG, that I sense is directionally true, about how Amazon is succeeding in driving subscriptions to direct-to-consumer services from HBO, Showtime, and Starz in particular. The data comes off suggesting a bit more dominant position Amazon is driving video subscriptions, and I have to imagine Apple is not that far off in driving subscriptions to a vast manner of services like Netflix, HBO Now, Hulu, etc., as well. This article highlights a bigger trend and potential shift in who may control the content bundle ecosystem going forward.
The Bundle Will Return
Pundits like to talk about, and point to, the unbundling of content services into a-la-carte subscription services. This trend is not going away. You will always be able to pick and choose the direct services you subscribe to as it is a win-win for consumers and content publishers. However, a time is coming, where we will see bundles re-emerge that package up current and new services into bundled subscriptions. However, my sense is, the power of these bundles will evolve from being just one form of media like video, to eventually include as many types of media as possible. An example would be, a service bundling video, music, movies, books, newspapers, etc., together with one master offer.
In the same way, a-la-carte subscriptions are for consumers and content publishers, bundles are similarly a win-win for everyone involved. I’d argue the vast majority of consumers will choose a bundle of some kind vs. just picking and paying for all their content individually. One reason is all those subscriptions add up and become tiresome for consumers to manage and often end up costing more than if they choose a bundle. But in this new model that is emerging, the master aggregator like Amazon, Apple, or Google, will be able to offer more options and variety of subscription services than any other type of platform.
A company like Amazon, for example, could conceivably integrate beyond what they do today with commerce, video, and music but also offer magazine and newspaper bundles, along with other network channel TV/video content into one master Prime offering. Similarly, Apple is well positioned to offer a-la-carte offerings but also master bundles of things like TV, music, newspaper/magazines, and potentially even hardware into a master bundle.
Google is the least well positioned at the moment, but you can not underestimate their reach and the power of YouTube in particular. YouTube as a master platform could evolve into a variety of offerings, music, and TV now, but over time Google could offer more robust subscription services into one package.
These three companies, and Apple and Amazon specifically, are well positioned because of the relationship with their customers they have developed coupled with an important theme I’ve written a lot about lately–trust.
The Powerful Combination of Trust and Consumer Experience
While Apple is top dog at this point I’m about to make, I think Amazon is a close, and possibly gaining second. Both these companies have a laser focus on customer experience. That sole focus is the primary reason they have gained the most valuable userbase on the planet but also established a level of trust we have not seen before in consumer electronics at scale. You could argue Sony could be in the conversation, but Sony is much more of a pure hardware play and I would not place Apple and Amazon in that camp.
What the TDG Data suggests, and I think there is evidence all over the place including digging into Apple’s growing influence in driving subscriptions to third-parties, is that Apple and Amazon are becoming power brokers for trust. The result is these platforms become the primary place partners will come to offer their services. For example, when it comes to TV content publishers will increasingly prioritize Apple and Amazon’s platform over the Comcast, Dish, Charter, or DirecTV’s of the world. When I say these companies focus on customer experience, this focus adds a level of differentiation for the overall quality experience of said content and will also create a preference by consumers to consume that content on Apple or Amazon’s platform.
What became new thinking for me, was not necessarily how Apple or Amazon needed to own every possible bit of content services to better integrate their own subscription services. Rather, what is interesting is how Apple and Amazon could be in a position to more deeply integrate third-party services into their platform better than anyone else. The result is the preferred platform to consume premium content, and ultimately that becomes a valuable proposition that consumers will pay for.
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