Right now, some of the biggest media companies in the world are hammering out the details of a new joint venture to bundle their streaming services together to attract sports fans.

Walt Disney’s subsidiary ESPN, Fox, and Warner Bros. Discovery will launch a standalone app this fall that offers many of the highest-profile sporting events including football, baseball, basketball, tennis, golf, soccer, and motor racing.

The So What

“The move toward cross-company bundling reflects the maturing of the video streaming market. Providers are grappling with a complex and competitive environment when going direct to the consumer, challenging cost structures, and the need to drive down churn,” says BCG’s Neal Zuckerman, a managing director and senior partner at BCG who leads the Global Institute for the Future of Television (GIFT).

According to BCG’s most recent GIFT survey of some 2,000 consumers in the US who are active users of one or more streaming services:

• The number of paid streaming subscriptions per household was flat in 2023 for the third year in a row.
• Churn spiked in 2023, however, with an average of 3.4 subscription cancellations per household—a rise of 52% over 2022.
• Households spent $12 less per month on streaming than what they are willing to spend, potentially allowing services room to raise prices. Closing just half of the $12 gap represents an $8 billion opportunity.
• The number of streaming subscriptions a household is willing to maintain at once ticked up for the first time since 2021, suggesting there is another 44 million subscriptions up for grabs.

Streamers hope that a pipeline of quality content and regular live events will encourage customers to stay for longer rather than binge watching and bolting. This allows for the higher pricing structures needed for a sustainably profitable business.

“I believe there’s a business imperative to try cross-company bundling. We know consumers feel overwhelmed by too much choice and want to access the video (and potentially other content formats) they want in fewer apps,” says Zuckerman.

“Many of the streamers have performance issues to address, including achieving sufficient profitability, low-enough churn, and ability to raise prices periodically. They can’t afford to maintain the status quo given the speed of the market, so competitively matched innovation is required. And I’m excited by the number of innovative offerings coming to market.”

Now What

Media firms have three operational levers to pull as they target healthy profit margins from streaming.

Grow and retain the subscriber base. New offerings that collect targeted content together in one place have the power to attract new subscribers. However, there’s also a danger of cannibalizing customer bases, including those subscribing to existing inter-company channels, linear television consumers, and even the customers of future product launches such as gaming services.

Target premium pricing. Offering differentiated and premium content may allow for higher pricing structures. And the evidence from BCG’s GIFT survey suggests that subscribers have some capacity to absorb price rises. Measures to tackle piracy and password sharing also boost income from subscriptions.

Lower costs. Joining forces to secure quality content may provide some economies of scale, especially where the rights to content are high. It may also be attractive for advertisers wanting to target certain demographics or interest groups.

“In addition, firms will need to maintain a relentless focus on engagement, the availability and quality of content, discoverability, and evolving customer trends,” says Zuckerman.

“But with our latest survey suggesting there is room for higher price structures, as well as more subscribers to capture, the growth opportunities are there for those who can create the right products.”