Streaming services are focusing on new strategies to keep subscribers interested. What would you do if you could get a turkey with a peacock? With milk the mandalorian?
In order to grow their user base and reduce churn, many streamers are cutting deals with companies in the grocery business, saying they can strengthen both sides of the equation by aligning companies that sell essentials like entertainment and food. I’m betting.
On October 8, Disney and Kroger announced an agreement that will give Boost With Kroger Plus members ($99 per year) an ad-supported subscription of their choice to Disney+, Hulu, or ESPN+ at no additional charge. This summer, Warner Bros. Discovery struck a deal with grocery and food delivery service DoorDash to give Dash Pass members ($96 a year) free access to the ad-supported max tier. In November, NBCUniversal partnered with similar service Instacart to offer Instacart+ members ($99 annually) a free subscription to Peacock. And Walmart continues to offer free Paramount+ to Walmart+ ($98/year) subscribers.
Of course, this streaming partnership follows Amazon Prime, the original bundle of videos and Vitol. Acquire users with $139 annual Prime membership fall out, thursday night football Prime Video offers discounts on focaccia (and other products) at Whole Foods stores. (Netflix, on the other hand, dismissed the idea of bundling.)
“Times are tough and budgets are tight from a household perspective, so consumers are being forced to make trade-offs,” said Jana Albanas, Deloitte’s vice chair and leader of U.S. communications, media and entertainment. says. “That’s why I think it’s a really interesting proposition for streamers to partner with these grocery stores and delivery subscriptions, because these things are obviously non-negotiable.”
Entertainment subscriptions are considered disposable, and consumers are picky about what they keep and what they cancel, Arbanas said. Research also shows that consumers don’t feel they’re getting much value from products.
“I feel like entertainment is not only kind of disposable, and if you’re strapped tight, you don’t need to have it, but it’s also a service that you’re paying too much for,” Arbanas says of the study.
Executives at major streaming services frame contracts as a churn prevention measure: Given the frequency of consumer subscriptions and cancellations (Deloitte puts the average churn rate at 44 percent, the rate of subscriber turnover increases each year) (suggests that it is high) and fixed for different types of services. Subscriptions with low churn rates can help alleviate these concerns.
Indeed, in many of these negotiations, the prime minister is the north star for both sides. By now, most people know that Amazon’s free and fast shipping is a big draw for subscribers, and Prime Video acts as a bonus. Both grocery stores and streamers are now trying to replicate the model with unique value propositions. “We need a partner who will retain our subscribers,” the executive added.
And there are other movements as well. Arbanas notes that partnering with grocery stores has the potential to bring in new types of customers and demographics, which is essential to building massive scale in streaming. Streamers and grocers could also share valuable customer data, which could lead to better targeting of ads.
“When you’re watching the show and they already know the types of things I buy at the grocery store and something is on sale or an adjacent item, there’s real power in that. And you can give me personalized ads that I want to watch anyway, and I can buy them right on the platform,” Arbanas says. “I think this is a very interesting opportunity for both companies to win.”
Perhaps serve some sponge cake by your side. spongebob square pants?
This article first appeared in the October 23 issue of The Hollywood Reporter. Click here to subscribe to receive the magazine.
