Disney Flip-Flops Again, Americans Like Bundling

1. Disney Flip-Flops Again

Disney found itself in the midst of another unscripted political drama this week as it initially rejected and then (in the face of mounting pressure) accepted political ads on Hulu that addressed what it deemed “controversial” subjects like abortion. As per Axios’ Sara Fischer, Disney will now apply the same standards to Hulu as it does to its cable networks like FX and ESPN in terms of acceptable advertising.

Why It Matters

For starters, it’s helpful to understand just how Disney wound up in this mess, which is sort of a fascinating story in and of itself.

The Communications Act of 1934 which was written to regulate network radio and then extended to broadcast networks, requires that broadcasters accept any and all ads from “legally qualified candidates for public office” with exceptions for things like obscenity.

While that law does not extend to cable networks, most all cable networks have a somewhat similar albeit slightly more stringent standard for the types of ads they will accept. 

Streaming however, is brand new territory and Disney’s initial reaction was to not run anything that could be deemed controversial—a stricter standard than it enforces on cable— though “controversial” is clearly in the eye of the beholder and there is, to steal a phrase from the Supreme Court, a slippery slope in deciding what is and is not “controversial.”

This all matters a lot because of how popular streaming has become and how easy it is to target ads to specific households on streaming, both of which have combined to make streaming a key part of both parties' 2022 political advertising strategy, with a projected $1.5 billion being spent on streaming this year, much of that money coming from broadcast and cable.

So it’s not just Disney that is going to be facing these decisions, it is all of the major SVOD and FAST services. Paramount and Comcast can take the (most recent) Disney path and apply the same standards they use on their cable networks, but all of the OEM-owned FASTs and tech-owned SVOD services will need to figure out what their position is.

Meaning this is probably not the last we are hearing about this issue.

There is, of course, another reason this all matters, which is that DIsney can’t seem to get out of its own way when it comes to politics. That then impacts public (and Wall Street) perception of both the company and its new(ish) CEO Bob Chapek.

It was only a few months ago that Disney got caught up in controversy around Florida’s “Don’t Say Gay” Bill, angering those on the left by not making a public statement condemning it and then those on the right when they finally did. The main perception, regardless of political affiliation, was that Disney was unprepared in a way that it should not have been, given the politicization of corporate America in the age of social media and the importance of Florida to the greater Disney empire.

So there’s all that too and it’s not a good look at a time when Wall Street is already down on streaming.

What You Need To Do About It

If you’re Disney, you need to spend a little money and hire someone who has experience with these sorts of things to be your political sherpa, someone with experience in DC, not LA. Let them flag all of the issues that are likely to come up before they come up so that you can get ahead of them. No one is going to care how well your IP franchises and cruise ships are doing if all they’re reading about is how you keep flip-flopping on political issues, pissing off both sides in the process.

If you’re everyone else in the streaming industry, you also need to hire some sort of political consultant(s), especially if TV is something you’re new at. You need to understand how to navigate the ever-shifting political landscape and it’s not something you can figure out internally.

If you are the streaming industry, you might consider forming some sort of industry group around political advertising that can promulgate a set of standards you all agree to abide by. Not only will it be a good look for Wall Street, it will also save you a lot on legal fees in the long run.

2. Americans Like Bundling

A new study from Hub Research confirms something many of us have suspected all along: people like being able to access all their streaming TV options from a single place. Like really, really like it: a whopping 91% think having access to multiple services via a single device makes their viewing experience better, with slightly more than half (51%) of those respondents opting for the even more emphatic option of “a lot better.”

Why It Matters

This is good news for companies like Roku and Amazon who have chosen to make channel store-like aggregation a big part of their pitch to consumers. It’s even better news for up and coming aggregators like MyBundle.tv and Paket Media who are well positioned to take advantage of this strong consumer preference.

The “why” is not all that confusing either.

The Holy Grail of UX for streaming TV is the uber-guide, an interface that sits on top of all other interfaces and lets you search every app you have access to, so that you don’t need to resort to Google to figure out which service the new White Lotus is on.

The reason we can’t have nice things like that is because many of the streaming services do not allow for deep-linking, e.g., clicking on the name of the show in the uber-guide takes you directly to the show.

Why? Because they are afraid that if they allow that, you won’t spend any time in their interface where they can suggest other shows to you and better track your viewing habits. A position many services will hold on to as long as they can, at  least until growing churn rates make them realize the benefits of consumer-focused user experience.

So in the interim, aggregation will be the way to go, where all your apps are billed and managed via a single interface.

We can also expect to see variations on The Great Rebundling as a part of this too, as everyone from MVPDs to device OEMs start to bundle streaming services together at a discount in exchange for a year-long commitment. A practice that will also gain traction as churn rates soar and SVOD services, who need to find ways to slow churn down, discover that year-long commitments can be a very effective tactic.

What You Need To Do About It

If you own an SVOD service or an interface, remember that consumers will most always choose the path of least resistance. To wit, one of the main reasons linear channels are enjoying a renaissance is because consumers don’t want to have to choose a new episode every 20 minutes. Which is exactly why they prefer it when everything is bundled together in a single interface with a single bill.

If you’re looking for an independent partner to help you stand up a streaming bundle, check out companies like the aforementioned MyBundle.TV and Paket Media. They are doing the right things to help make having multiple streaming subscriptions easier and more palatable for consumers.

If you are thinking that this sounds a whole lot like old school pay TV, bear in mind that with the exception of certain cable companies and their consumer-unfriendly foibles, pay TV was incredibly popular in the US. As in, people really liked having access to hundreds of channels and vast on demand libraries. Just give them a better, more updated interface and maybe a break on the pricing and they’ll be happy.

Remember too that TV offers a very different scenario than music or newspapers, where digital access to music and articles is just much easier than access to the physical product. Which is why those industries were so easily disrupted by the shift to digital and TV was not. 

At least not yet.

And for those of you who made it all the way to the end of the Week In Review, here’s a little treat: a link to get an early download of our new special report, FASTs Are The New Cable, which is being released on Monday.

Enjoy.