Pay TV had yet another difficult year as more consumers choose to cut their cable.

However, it wasn’t exactly kind to streaming services either, as they had to contend with dropping ad revenue, declining member numbers, and unwavering losses while Netflix remained the industry leader.

However, the era of cable bundles is ending and being replaced by a new sort of bundle that may offer a way ahead for both cable providers and streamers. This month, media leaders hinted that 2024 would be the year when media businesses take the bundle seriously.

“The Charter-Disney deal was a sign of the times,” said Macquarie analyst Tim Nollen.

In the run-up to the National Football League season, Disney and cable behemoth Charter Communications scuffled over payments; Charter CEO Chris Winfrey claimed it wasn’t “a typical carriage dispute.” For almost two weeks, millions of Charter Spectrum users were unable to watch Disney-owned networks, such as ESPN.

The agreement that provided Spectrum TV Select Plus members with access to both the ad-supported tier of Disney+ and ESPN+ ended the blackout in September, just hours before the start of “Monday Night Football” on ESPN.

Nollen continued, “Given the large subscriber bases and favourable revenue implications for pay TV and broadband companies, similar arrangements could very well emerge in 2024.”

Earlier this year, John Malone, the chairman of Liberty Media and a pioneer in cable TV who also serves on the board of Warner Bros. Discovery, forecasted increased integration of streaming services into cable packages.

Increased bundling would also result from acquisitions and mergers. Though negotiations are still in the early stages, Warner Bros. Discovery CEO David Zaslav and Paramount CEO Bob Bakish met last week to examine the possibility of a merger.

Even while there is a market for a streaming bundle, major parties have never been eager to sign one. When providing their services at a discount, businesses would need to manage the math involved in calculating average revenue per user, or ARPU, and subscriber growth.

A cheaper package may result in a lower ARPU, but if subscribers increase dramatically as a result of the bundle, this loss may be mitigated. Media firms that also own cable networks might be worried about their cable plans being eaten up by streaming bundles.

Early in 2023, leading streaming services took several significant actions. In a move long anticipated, Disney consented to purchase Comcast’s remaining one-third interest in Hulu. Additionally, earlier this month, Disney started to roll out its integrated Disney+ and Hulu platform; a full release is scheduled for March 2024. Disney already provides a Disney+, ESPN+, and Hulu three-way deal.

It was previously reported last month that Apple and Paramount Global were thinking of bundling Apple TV+ and Paramount+.

Verizon, a provider of home internet and cell phone plans, was allegedly preparing to give its customers a bundle of Netflix and Max’s ad-supported tiers for $10 a month, which is $7 less than buying them separately.

Potential benefits for the business could arise from the inclusion of streaming in pay TV packages. Pay TV ad income has decreased significantly and is expected to drop by 18% this year, according to media investment group GroupM. According to Nollen, the ad revenue provided by the streaming platforms’ ad-supported tiers, which are frequently included in bundles, drives higher ARPU for cable operators.

Though at a lesser rate, streaming services have had to deal with customer losses over the past year, just like pay TV companies. To counteract membership losses, streaming giant Netflix, for instance, changed course and raised the cost of its plans in addition to introducing ad-supported levels.

In his warning of a “generational disruption” last month, Zaslav mentioned the company’s streaming service Max, which he claimed was once “losing billions of dollars.” However, the most recent quarterly earnings report from Warner Bros. Discovery shows that the firm made money in its streaming division.

According to Ampere Analysis, the Disney-Charter agreement provided cable operators with a framework to adapt their business models into the streaming era and stabilise subscriber trajectories.

“Charter gets to protect and hopefully grow pricing on its subscriber base,” Nollen said. “Disney and Warner Bros. Discovery have the most potential upside” from the bundling trend “given the breadth of content on their combination of services and the fact that they’re beginning to bundle those together already.”

There were no comments available from Disney, Warner Bros. Discovery, Paramount, Netflix and Apple.

(Adapted from CNBC.com)