In streaming, giving consumers a reason to stick around is critical to remaining relevant. This is true of just about any category, but particularly for the OTT world because streaming services have such low barriers to entry and exit. We know from our own research that 62% of people have signed up for a service with the specific intention of canceling after they have watched the content they came for.
One solution that major players are turning to is the rundle.
The recurring revenue bundle, or “rundle” as coined by Professor Scott Galloway of NYU Stern, is a collection of bundled services, products, and/or discounts offered as a subscription. And they’re storming the world of retail as brands like Wayfair, AMC, and even Wal-Mart launch rundles of their own.
Rundles don’t just bring additional value to customers; they also incentivize them to return to your brand over and over. The bundled services you offer don’t have to be limited to the core capabilities of your company—you can use a rundle to branch out into new areas (like Amazon has done recently with the launch of their Halo fitness band), or to enhance a customer experience (like Wayfair offering furniture assembly).
Amazon was one of the first companies to launch a premium loyalty program back in 2005. Amazon Prime Video was an early addition to the lineup, launching in 2006. And there can be no arguing with the success of Prime. But until the launch of Apple One in Fall 2020, no other player in the streaming market had ventured into this potentially lucrative space.
Why Do Bundled Services Make Sense in Streaming?
Well, for one thing—unless you’re a powerhouse player, loyalty in streaming is currently low. As we found in our MDX research, streaming subscribers pay for or have access to over 4 streaming services, but regularly use fewer than 3 of them. And among the brands we looked at, the ratio of those who no longer have a service to those who still do is approximately 1:3. That ratio changes to 1:5 only for Netflix and Amazon Prime.
There’s little question as to why consumers are loyal to Netflix. When we look at our overall Index scores, Netflix is the all-around leader. But according to our metrics, Amazon Prime ranks 6th —behind Netflix, YouTubeTV, HBOMax, Disney+, and Hulu. And of the consumers we surveyed who pay for Prime themselves, 20% report that they do not watch the service regularly (1x per month or more). By comparison, just 12% of paying Netflix subscribers say the same.
The differentiating factor? Amazon is a rundle. Consumers are sticking around for more than just video content. If they aren’t finding a show or movie to watch, they might be getting value from free shipping, or enjoying access to Amazon’s music library. The average Amazon Prime member spends over 2x as much on goods and services from Amazon each year as a non-member.
This is not to say that every streaming bundled service needs to go out and launch an e-commerce site, theme park, or retail line. But rather that in the brave new world of streaming media, brands must fully leverage all their services and goods to remain relevant to the consumer.
In the MDX Index, we discuss opportunities in community-building and transmedia that can expand the walls of the streaming category and help streaming brands stay relevant across a broader customer journey. These same opportunities can be leveraged to build a streaming bundled service that keeps consumers coming back again and again. Apple is making the first move…it may be time for other companies to take notice before it’s too late.
Rebecca Lucash
Manager, Strategy Insights