Meet the new bundle, same as the old bundle?
Consumers have embraced broadband-delivered TV from Netflix, Amazon and an abundance of other streaming services, often in search of lower monthly bills – and as a path to avoid paying for channels they did not watch in the big programming bundles sold by cable and satellite TV providers.
But as cord-cutting becomes more popular, a counterintuitive trend is emerging: higher streaming TV prices and bundling, this time among Internet streaming services.
Within the past month, several of the major Internet TV services – Sling TV, DirecTV Now, and PlayStation Vue – have announced price increases. And providers have started to sell ever larger bundles, some with more than 100 Internet-streamed channels.
What began as a "Great Unbundling" of media is starting to become the "Great Re-Bundling," says Will Kreth, the executive director of the Entertainment Identifier Registry, a nonprofit group providing a ID system for movie and TV content. "The temptation to bundle" – to increase revenues from each subscriber from a pricier monthly subscription – "is just too great," he said.
The live-TV subscriber base is large and growing, with Netflix far in the lead, followed by Sling TV, DirecTV and Hulu. Just as it's gaining momentum, prices are inching up.
Sling TV, which in 2015 became the first streaming TV service to deliver a package of live-streamed channels including CNN, ESPN and TNT, recently increased the price of its entry-level Sling Orange package by $5 to $25 monthly. It's also increased its programming bundle to 30 channels from 15, with the addition of AMC, Comedy Central and others.
Also hiking prices: AT&T's DirecTV Now streaming service, which has begun charging an additional $5 each month for its various programming packages. The entry-level bundle, with more than 60 channels including local ABC, CBS, Fox and NBC channels in many markets and CNN, ESPN and USA, will now cost $40 monthly.
Sony's PlayStation Vue is raising its monthly prices by $5, starting July 24, making the cost of its lowest-price plan $44.99 for about 50 channels.
The main reason for the price increase? The cost of live programming including sports and news, the providers say. "We must increase the price of our multi-channel plans to keep pace with rising business costs and enable us to continue offering a better way to watch the best in live sports, entertainment, and news," said Dwayne Benefield, head of PlayStation Vue on the PlayStation Blog.
Earlier this year, other major streaming players unveiled higher prices, too. FuboTV ($34.99 for first month and $44.99 each month after) in February upped its monthly price by $10 for newcomers to its 90-plus channel plan. Started three years ago as a soccer-centric service, fuboTV now also offers local Fox and NBC channels, as well as news and sports channels.
Similarly, YouTube TV in March raised by $5 to $40 the monthly cost to new subscribers of its service, which has 50-plus channels including local ABC, CBS, Fox and NBC local in much of the U.S. It added Turner channels such as CNN and TBS at that time.
These prices still fall below the average monthly bill for traditional pay-TV subscribers, which Leichtman Research Group estimates as $106. But streaming services are tempting subscribers to add more programming.
Should you tack on much more – and add in the cost of Netflix ($10.99 or $13.99 monthly), and perhaps Amazon Prime Video ($8.99 monthly or as part of a $119 annual Amazon Prime subscription) – your collective bill can quickly approach that of your old pay-TV bill.
For instance, Sling TV has an additional $25 Sling Blue package, too, which includes local Fox and NBC channels in many markets among its 40-plus channels. Subscribers who pay for both Sling Orange and Sling Blue get a discount, paying $40 to get both. And you can add any of nine additional programming packages such as Sports with NBA TV and NHL Network starting at $5 each.
The largest DirecTV Now package, which will cost $75 with the price increase, has more than 120 channels. PlayStation Vue's Ultra plan, due to cost $79.99 monthly, has more than 90 channels including HBO and Showtime.
This move to packaging programming is reportedly attracting a prominent name: Apple. The maker of iPhones and iPads is apparently looking into creating its own bundle, which could include music, video, news and iCloud storage, according to reports recently in The Information and The Wall Street Journal. Apple did not respond to a request for comment on the reports.
There have been signs that Apple is readying a content expansion. The tech giant is expected to spend $1 billion this year on original content and recently signed Oprah Winfrey to a multi-year content partnership. Apple last year added a Reese Witherspoon-Jennifer Aniston TV series to its plans.
Bundling video with other content would make sense for Apple, says Mike Vorhaus, president of research and consulting group Magid Advisors. While they may be behind the other players, "it is far from too late to bring more content packages to the consumer party," he said.
Streaming prices will likely continue to increase, Vorhaus says, noting that Netflix has experienced solid growth despite a price rise of $1 and $2 for its standard and premium plans in October. And consumers can save money via streaming, compared to traditional pay-TV service, he says.
"Even with a skinny bundle and two to three (streaming) packages, your pay-TV total cost is likely to go down a bit," Vorhaus said. A recent Magid Media Futures survey found three-fourths of U.S. online users pay for at least one streaming video service and the average streaming subscriber has two services.
But rising prices suggest consumers are simply trading the pay-TV cord for the broadband one – a shift that is less costly for providers as they don't need to provide TV boxes, says Phil Swann, president of TVPredictions.com. And broadband-delivered TV is not as reliable as cable, satellite or fiber-optic TV, he says.
Prices "will go higher," Swann said.
Services that include sports are "being forced to raise the price," says Rich Greenfield,
a media and technology analyst with financial services firm BTIG in New York. That creates opportunities, he says, for services such as the new AT&T WatchTV service and Philo, neither of which have sports networks.
Just about 2 weeks old, AT&T's new service is free to subscribers of its Unlimited & More data plan ($15 to others), and has 30 channels including AMC, CNN and TBS. Philo's $16 monthly service, launched eight months ago, has 40 channels including A&E, AMC, BET, Comedy Central, Discovery Channel, HGTV and OWN.
So far, consumers seem to be holding firm on their spending, with the average streaming home spending about $42, Leichtman Research estimates. "The entry price is a little more," said Bruce Leichtman, president and principal analyst for the Durham, New Hampshire, research firm. "But we are still in a fairly early stage where consumers are still dabbling with these services and seeing what works for their home. If the price goes up, it's part of the trial phase."