Barclays predicts the winners and losers of streaming TV’s next phase, as services like Disney Plus launch and new bundles emerge

  • The next stage in the cord-cutting revolution could see streaming services like Netflix and Disney Plus bundled alongside one another, not too differently from the way TV channels are today, analysts at Wall street firm Barclays predict.
  • The shift could radically change things for the streaming, media, and telecom companies that support the streaming ecosystem today.
  • Comcast and Netflix are likely to be winners in this scenario, the analysts say.
  • The legacy media brands like Disney and Discovery that are going over the top will be on the losing end.
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Get ready for the re-bundling of TV.

The next stage in the cord-cutting revolution could see streaming services like Netflix and Disney Plus bundled alongside one another, not too differently from the way TV channels are today, analysts at Wall street firm Barclays predict.

The proliferation of streaming-video services, including upcoming offerings like Disney Plus, Apple TV Plus, and Quibi, will likely lead to a rebundling of platforms, alongside the broadband or data services that allow people to access them, the analysts wrote in an October 2 note.

Envision an internet provider like Comcast selling a broadband service along with access to a selection of streaming apps — like Netflix, Amazon Prime Video, and the upcoming NBCUniversal platform, Peacock — for a flat rate each month. It's the next logical step, the analysts say, as people consume more video over the internet and more streaming platforms hit the market.

Already, platforms like Apple and Amazon are selling streaming subscriptions through their apps to create a central point of billing and interface to access the services through. Media companies like Disney are also starting to bundle their various offerings streaming offerings.

The shift to incorporate broadband services in the bundle could boost adoption of those packages, and radically change things for the streaming, media, and telecom companies that support the streaming ecosystem today.

Here are the winners and losers, as Barclays sees them:

The winners:

While tech companies like Apple, Amazon, and Roku are reselling streaming services á la carte, the analysts at Barclays think the companies best positioned to bundle streaming services are internet- and data-service providers like Comcast and Verizon.

Among those providers, only one has really invested in building products to enhance the broadband-streaming bundle, the Barclays analysts argue. 

Comcast is in the best position to win with bundles.

To win in aggregation, the analysts at Barclays think resellers of streaming services will need to offer more than discounts on price.

Comcast, one of the biggest internet providers in the US, also offers broadband customers a free streaming-TV box, Flex, with a collection of movies and TV shows licensed by Comcast, as well as access to streaming subscriptions, like Netflix and Amazon Prime, and apps like YouTube.

It brings streaming content from a variety of sources into one user interface, so audiences don't have to change apps to switch between streaming Netflix's "Stranger Things" or Amazon Prime's "Jack Ryan."

"A device such as Flex has larger ecosystem implications," the Barclays note said. "We believe it allows Comcast to aggregate multiple OTT services including its own into one user interface and solve what we consider to be the biggest problem today in the streaming world: content discovery."

Comcast's customer base of more than 27 million broadband customers could also help introduce new audiences to services like Netflix, which has grown so much in the last decade that most people in the US who would have subscribed to the service on their own already do, the note said.

Read more: How Netflix is using companies like Comcast and T-Mobile to drive its next phase of growth

Netflix will have a prime place in the bundle. 

All eyes are on streaming leader Netflix as new competitors like Disney and Apple roll out their streaming services. But the analysts at Barclays don't view those services as real rivals.

Disney Plus, for instance, will cater to families with movies and TV shows tied to brands like Marvel and Star Wars. It'll also have a more limited library than Netflix at launch.

Disney's sports streaming service, ESPN Plus, similarly offers live sports, documentaries, talk shows and other programming that is more complementary to Netflix's library of originals and licensed TV shows and movies than a replacement.

Read more: How Disney Plus, HBO Max, and NBC's Peacock streaming service stack up in the battle against Netflix

"What is interesting to us about this process is that most new streaming services are actually avoiding taking on Netflix directly," the note said.

Netflix is still the leading general-audience streaming service, in Barclays' view. That would make the platform central — and the most desirable service — in any streaming bundle.

"Netflix's role in these streaming bundles is likely to be more akin to that of a legacy broadcaster as the anchor of the bundle," the note said. "Everything else is essentially an add on. This role should allow Netflix to penetrate much deeper into broadband households than is the case today."

The losers:

In short, legacy media companies will be squeezed by any new streaming bundles.

Disney, WarnerMedia, and the other legacy media brands moving online will be squeezed.

The economic reality is changing drastically for legacy media companies.

In the traditional pay-TV world, programmers like Disney and Turner were paid fees per subscriber by every cable provider that carried their channels. In today's streaming environment, those media companies sell subscriptions themselves through marketplaces run by tech companies like Apple and Amazon, and have to give those marketplaces a cut of their revenue for the privilege.

Standalone streaming apps also require a steady and robust supply of fresh programming to keep people paying for services month after month.

Netflix is projected to spend more than $15 million on content this year to sate its audience of more than 150 global subscribers. That's expected to be more than any other media company that doesn't offer sports.

Bundling will only speed up the shift away from traditional TV services and toward streaming video, which will squeeze the margins at major media companies more, the Barclays analysts wrote.

"We believe every dollar lost in the legacy ecosystem is likely to be a lot more profitable than a dollar earned through streaming because of the need for more content to support on demand services," the note said.

Mid-tier media brands like Discovery, CBS, and Viacom could be the biggest losers. Disney has a ton of content and brand power. But the analysts weren't convinced that those other media brands have the footing to compete with Netflix on a global scale.

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