The New Entertainment Un-Bundlers

Last month I wrote a post called “The New Entertainment Bundlers” in which I talked about the emerging group of companies that are bundling subscription entertainment (and other services) into an offering that makes it easier and less expensive for consumers to acquire streaming entertainment services.

But something has happened on the way to the forum. Amazon has decided to unbundle its streaming video service and sell it in the US for $8.99/month. Amazon’s Prime service remains a massive player and bundler of entertainment in the market but the decision to unbundle video suggests that bundlers like Amazon and YouTube will also unbundle and compete on multiple dimensions. That makes sense.

Of course, it remains to be seen if a bundler like Amazon will allow another bundler, like Verizon or AT&T, to bundle their unbundled services. From a consumer perspective, that would be best. The more options and the more competition in the market, the better for consumers. It’s nice to see the market evolving in that direction.

#Film#streaming audio#Television

Comments (Archived):

  1. William Mougayar

    This was bound to happen. These services are the new “channel flippers.” Instead of flipping channels, we’ll be flipping Services- Netflix, Amazon, Hulu, YouTube, etc…So when it comes to cordless watching, the new entry points are the Roku’s and SmartTVs that let you configure your entry screen.

    1. awaldstein

      yup-especially as the key is not licensed libraries but original content.Forget YouTube but of the big channel players is it only Apple that doesn’t product content?

      1. William Mougayar

        true, apple doesn’t like to be bundled with the others. so it will remain on its own it seems, in the same way that it is now with the iPhone. the rest of the industry looks more like an Android ecosystem with openness, vs. AppleTV where the buck starts and stops with them.

    2. Jess Bachman

      And soon enough.. our “content” bill will creep up to $100 just like our cable bill.

      1. William Mougayar

        Exactly. $6-10 here and there will add-up.there is no free lunch. we just change restaurants.

        1. Jess Bachman

          And then services will get bundled again for a lower price… then unbundled…and on and on with increasing frequency between “bundle horizons” until the bundling and unbundling of content atoms can only be measured by CERN.What a time to be alive!

    3. David Gillespie

      Did exactly this yesterday when I was switching between HBO Go and Sling TV to watch the NBA playoffs, via Google Cast. I only plan to have it while the playoffs are on and then cancel, but I imagine they factor in those bumps as nice-to-have incremental revenue from people who don’t subscribe to cable.

  2. jason wright

    bund, bond, band – the nature of the relationship between consumer and producer has never been more complicated.

  3. csertoglu

    @fredwilson it’s going back to microchunks. i suspect it will get even further un-bundled. the bundling model was driven by scarcity of bandwidth and search options.

  4. pointsnfigures

    Is there anything Amazon doesn’t do? Wouldn’t surprise me if they started their own Amazon Facebook Prime.

    1. jason wright

      a living wage?

      1. pointsnfigures

        What’s a living wage? How much? Pre or post tax? Which area of the country? World?

        1. LE

          A wage paid by a union job that is so high that it forces jobs to go overseas, that’s what it is. (Said in jest, at least partly)

        2. jason wright

          a wage pegged to a % of the CEO’s annual (and no stock and options subterfuge, or offshore stashing). That’s how a society remains a society, that place where we all live together in some form of basic harmony.

          1. jason wright

            i’m not suggesting that Bezos is overpaid.

          2. pointsnfigures

            my comment was sort of satirical, and yours was snarky. I asked what a living wage was, and you defined it. I disagree. It can easily be argued that Bezos is underpaid given the data out there.I think CEO pay is pretty irrelevant to a harmonious society-which is an unquantifiable statement. Although, I am 1M times for a society which creates and offers opportunity. Of course, we have to realize people make individual choices and often don’t take that opportunity.The path forward isn’t through a govt mandated wage or program.

          3. jason wright

            not snarky. you point is not that Bezos is overpaid, or that one CEO should be compared to another CEO, but that a CEO’s salary should be linked to the wages of his or her company’s employees. it’s not ideological, it’s good business sense. it creates a culture where everyone in the business is pulling in the same direction to achieve success.

          4. JLM

            .Can’t even come close to seeing the relevance of that yard stick. How about if I started and own the company?Wages are set by market forces, why the presence of 12-20MM illegal immigrants with low skills and lower wage expectations are so detrimental to the American working man.Why median household incomes are plummeting.Has nothing to do with what happens at the top but everything to do with happens at the bottom including employers engaging in predatory labor practices.JLMwww.themusingsofthebigredca…

          5. jason wright

            if you start your own company you have the power to create whatever culture you wish for you and your employees.

          6. pointsnfigures

            You do, but you have to make a profit-otherwise it’s a hobby.

          7. jason wright

            and not mutually exclusive

      2. Russell


    2. Susan Rubinsky


    3. Tom Labus

      Bezos is insatiable

      1. pointsnfigures

        Agree. Hires great people and executes like hell-creatively.

        1. Tom Labus

          It works!!!

  5. Luke Skurman

    I need to give this more thought but here’s what I think is going on … they want to signal to Netflix that they are a worthy competitor, they have cash for rights and new shows / movies (and they’re willing to continue to spend it), and ruffle their feathers before their earnings today … yet in the end, I think the play is to simply justify to folks how good of a “value” Amazon Prime actually is, folks might believe that Amazon Prime Video and Netflix are equals (or they might not) but the point is for only $2 more a month, you get two day shipping, you get same day shipping in a lot of markets, you get music, you get this you get that, it simply justifies becoming a member even more when you have this perceived value that Amazon Prime Video is already worth so much money.And somehow if Amazon Prime Video becomes a smashing success, it’s easier internally to devote resources to it … if Amazon Prime Video is a hit or full blown Amazon Prime members grow, either way, Amazon is winning.The reason, I don’t think this is going to be a trend … are they going to try to do Amazon Prime Music? for $5.99/month? To compete with Spotify / Apple / Soundcloud?? I think the unbundling is good but in the end they really just want to grow full Amazon Prime Memberships, imho. This is a way to start to do that. We’ll see what happens next. Always interesting with Amazon.

    1. JimHirshfield

      Interesting – a pricing theory head-fake.

      1. JLM

        .More triple threat position — pass, dribble, shoot. The head fake is just the preliminary to the triple threat.But, you knew that, right?JLMwww.themusingsofthebigredca…

      2. Girish Mehta

        Actually, its Pricing 101 πŸ™‚ – establishing “anchoring” and “transaction utility”.Traditional economics sometimes misses (but behavioral economics does not) that customers think in terms of both “acquisition utility” AND “transaction utility”.A simple example of transaction utility (Hat tip Richard Thaler, writing from memory here):You are on somewhat isolated beach on a very hot day and a ice cold beer is exactly what you need. Your friend offers to look for a beer nearby and says he saw small shop a mile down the road which might carry a cold beer; if not there is a luxury resort a little further down which would have certainly have it. He asks you how much you are willing to pay for the beer.Now the beer is the exactly the same, but you tell him that if it is from the shop you don’t’ want to pay a cent more than $3. Whereas if he gets it from the luxury resort, he can pay upto $6. The unwillingness to pay more than $3 for the beer from the shop while you are willing to pay $6 for the exact same beer from the resort is an example of demanding +ve “transaction utility”…even though the “acquisition utility” of a ice cold beer on a hot day is the same regardless of where it was purchased.Now, assume the shop is selling the beer for $5. The best thing for your friend to do is to still buy it from the shop although you have instructed him not to pay a cent over $3 for the beer purchased from the shop. And then to tell you that he bought it at the resort for $5 :-). He saves you money and you also get +ve transaction utility (because you were willing to go up to $6 for the resort beer).What Amazon has done by setting the $8.99 /month price for the monthly video subscription is to emphasise the “transaction utility” of the monthly Amazon prime service at $10.99/month…and, even more so, for the $99 / year Amazon prime service (that works out to $8.25 on a monthly basis).

        1. JimHirshfield

          Great analysis, thanks. And now I’m thirsty.

    2. JLM

      .I agree more with you than you do with yourself.The value of Amazon Prime to me, shipping/eBooks, is huge. The media is just a cherry on top of a lot of whipped cream.In some ways, Amazon Prime is too good a deal.JLMwww.themusingsofthebigredca…

      1. Luke Skurman

        Or maybe, Amazon uses this moment as a way to justify a price increase for Amazon Prime down the line. The two are priced too closely – Amazon Prime and Amazon Prime Video … but Amazon didn’t want to make Amazon Prime Video too cheap, otherwise everyone would feel it was ‘inferior’ to Netflix.I do agree that Amazon Prime for the year is a very good deal … $99/yr.

        1. JLM

          .Of course, they’re going to increase the price of Amazon Prime.When I signed up, I think it was $50. I didn’t know it was $99 until I read your comment.The $100 pricing barrier means nothing to me as I get that back with free eBooks alone.JLMwww.themusingsofthebigredca…

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    3. LE

      Could also signal Netflix moving away from Amazon to provide some of their infrastructure. So now Amazon is putting the pedal to the metal and heading in the direction of being a more serious competitor.That said Amazon has never been particularly good gui wise so it should be interesting to see what changes they make there. It’s a very primitive experience.

    4. Donna Brewington White

      Good analysis. Plus, if they can get people on the site to watch a video they can sell them other things. (I should know.) As a Prime member so much easier to make the quick decision to buy that shiny thing or the dog food they are reminding me I haven’t bought in a month. Oh right and since I’m already here…click.So now as you say, if not a Prime member, for only a few dollars more than video can get 2-day shipping? Nice.Smart Amazon.Although I’m not sure I’d pay 8.99 for Prime Video. Most of the things I watch on Amazon are not part of Prime Video. It’s more of a nice side benefit.

  6. Salt Shaker

    Bundling w/ Amazon Prime delivers a distinct competitive advantage vs. other streaming services. Unbundling leads to commodization. Producing strong, quality original content is hard to do right and I think it’s only a matter of time before HBO and/or SHO, the guys who do it best, are gobbled up. For example, I think there will be increased pressure on TW to unharnesse value and either spinoff or sell HBO.

    1. awaldstein

      best comment of the day.

  7. JimHirshfield

    Pricing shenanigans. The extras you get with AMZN Prime are nice – and I use them. But none individually are better than their competitors that do one thing, and do that one thing exceptionally well.

    1. LE

      Exactly. Amazon streaming (even though last I heard they provided the infrastructure for Netflix) [1] is nowhere near as good (for me at least) as Netflix is. I try to avoid it at all costs. Of course that is fixable. Also I don’t like the interface for choosing movies it’s primitive compared to Netflix.[1]

      1. K_Berger

        Being able to save Prime video to your mobile devices is a real benefit, especially for travelling and especially for kids.

      2. ErikSchwartz

        To me the hybrid TVOD/SVOD model is very useful. Many things are available for free and if they are not available for free then they are available to buy or rent.If NFLX doesn’t have it to stream (and there is lots of stuff they don’t have) then they offer to send you a DVD in the mail in a few days.

        1. LE

          I am adverse to buying (or renting) simply because with so many free choices it’s often the case that I don’t even watch what I have started to stream if it isn’t engaging enough. I just find something else. Having to pay and then not watch is uncomfortable. Plus I don’t like the idea of having to watch within “x” period of time either. Or decide “buy or rent”. To much to think about. Especially if the content isn’t super special which let’s face it most of it isn’t.

          1. ErikSchwartz

            I have a 5 year old boy and an 8 year old girl. Sometimes they want to watch what they want to watch. If it’s from Disney then NFLX usually doesn’t have it.

          2. LE

            Oh well that makes total sense. Kids are often easier to please [1][1] Kids can have a good time swimming in a pool at a Holiday Inn or actually just jumping around in the backyard with a hose and eating chicken fingers for lunch.

  8. ErikSchwartz

    From the larger economic standpoint from the content creator perspective SVOD is still bundling. It makes no difference if Trigger Street Productions sells House of Cards to Netflix or to traditional cable. Bundling is the amortization of risk in producing television programming.TVOD is truly unbundling. Your art stands and makes money (or does not) on its own merits.

  9. JLM

    .The consumer is not static and therefore suppliers of content have to be flexible enough to service the then current wave and ensure it is the wave with the most potential customers.It might just be a pendulum. Why not?What is the point around which all this bundling revolves?For me, it is 1Gig Internet service which implies fiber optic service. That is where I start and the locus from which all else flows.In the ATX, it is incredibly inexpensive with 5-7 suppliers. I can no longer keep track of them all.Amazon Prime makes the rest of it pretty damn easy. Still I have a few other accounts. I really don’t know which supplier provides which content because I only identify with the content itself.JLMwww.themusingsofthebigredca…

    1. Dan Epstein

      FWIW, Ting is rolling out symmetric gigabit in my town (Charlottesville, VA) at $90/month for residential ($140 for business).

      1. JLM

        .I pay $60 in the bundle. To be precise — I get phone, cable, lots of free content, 1gig for $60/month plus taxes.You are a lucky human living in C’ville. One of my favorite places. I’ve made that trip over Afton Mt many times.JLMwww.themusingsofthebigredca…

        1. Dan Epstein

          I agree. Cville is great. The Mexican food needs work, but it’s getting better.

  10. Will Chang

    The next step is for these “unbundled” services to partner with service providers a la T-Mobile and Spotify/Pandora. That said, there’s nothing stopping providers from working with multiple video services. Content will be the main differentiator moving forward.

  11. Tom Labus

    Where does Verizon fit in her? There is a new set-top box in play for content delivery and the YHOO bid. Tim Armstrong and co could be a player here.

    1. William Mougayar

      yeah…a merger of 2 not-so-great companies doesn’t make a better one.

      1. Tom Labus

        Yes, but an imaginative use of the assets of all the companies could get interesting. Ya never know. I like out of blue shots once and awhile.

  12. laurie kalmanson

    hulu, prime, hbogo, netflix — better than cable

  13. sigmaalgebra

    Yes, I did remember correctly:β€œGentlemen, there’s only two ways I know of to make money: bundling and unbundling.”So, right, this is from James Barksdale, from FedEx, etc. and is in…I don’t agree with the remark, but it is famous!

  14. Donna Brewington White

    From a consumer perspective, that would be best.Shouldn’t the consumer’s best interests always be served by capitalism? Or is this only in theory?

    1. Stephen Voris

      I’m pretty sure the theory has the weasel word “eventually” in there somewhere.And then an asterisk at the end with the disclaimer “*time spent in local maximums proportional to distance to next nearest maximum”.In practice, there’s no actual time limit implied on “eventually”.Similar theory may apply to marriages and the best interests of their participants.

    2. Cam MacRae

      best interestsHahahahahahahahahahahahahahaha. Hahaha. Haha. Ha. Ha.Desire, yes. But only by theoretical capitalism. The incumbent crony-capitalism/kelptocracy hybrid couldn’t give two figs about the interests of the consumer.

  15. BillMcNeely

    On the hardware side do you think the streaming boxes Android TV will take off. It seems like places like Korea it will… Any thoughts?

  16. cavepainting

    1980s -2010: All content got bundled to optimize business models of aggregators and access providers (broadcasters and cable / satellite companies )2010 – Now: Good chunk of movie and TV content gets unbundled and re-bundled by the disruptors (Amazon, Netflix, Hulu etc.), and also sold direct to consumer by content producers and aggregators.Hope for (Now- Near Future): All content gets unbundled and atomized to their lowest primitives, and can be bought or rented individually. And also sold as part of multiple bundles on several platforms.When customers have access to the widest selection of content on multiple competing platforms, and can buy or rent them any way they choose – a la carte or a part of a bundle – it will likely increase over-all consumption and industry revenues. If markets work right, that should ideally make it even more affordable and set a virtuous flywheel in motion.

  17. Prokofy

    Yes, I was glad to see this because it turns people from defeaters of copyright and enablers of destructive copyleftism on the Internet to law-abiding citizens enabling other law-abiding and productive citizens — corporations — to make a profit and do the right thing. It’s the difference between my kids and their friends being tempted to steal just to get their homework done, even, as schools and colleges increasingly have assignments related to copyrighted content online, and their just paying a small fee to do it legally.

  18. LE

    The other similarity to Walmart is getting people to buy things that they don’t really need and give them near immediate gratification and reinforcement. Which of course is what many retailers do to some extent.

  19. Donna Brewington White

    That is the artist in you coming out. +15 πŸ˜‰

  20. JLM

    .Where is that base jumping site?As a guy who spent a few lifetimes under silk, it always makes me nervous to see a parachutist without a reserve but I guess if you’re that low, it may not matter.JLMwww.themusingsofthebigredca…

  21. ErikSchwartz

    When you are singlehanding across the ocean if you fall off the boat you die. The only thing wearing a life jacket does is change your mode of death from drowning to exposure.I’d rather drown in a few hours than slowly go insane due to dehydration/drinking seawater/exposure. I clipped in with a harness but I didn’t wear a PFD when offshore solo.

  22. JLM

    .OK, let the hair on the back of my neck come back down. I get what you’re saying. Do you wear a harness?I never even touched a reserve handle. But I always knew where it was.JLMwww.themusingsofthebigredca…

  23. ErikSchwartz

    I always wore a harness and was clipped in when above deck. Even when in the cockpit.

  24. Cam MacRae

    I’ve deployed mine. Always find it interesting when people talk about second chances. I prefer to think of it as a last chance — heightens the senses.

  25. pointsnfigures

    Was minimum wage designed as a full time wage? Or was it designed as fill in income, first job income? Raising it creates more unemployment, and less opportunity.