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Spotify and Hulu? How (and Why) OTT Partnerships Formed

Spotify and Hulu? How (and Why) OTT Partnerships Formed

The current TV landscape makes it difficult for streaming platforms to simultaneously meet viewer demands and revenue requirements. 

Take the scenario that Emily Todd VanDerWerff at Vox calls “topsy turvy”: fans of the hit Netflix sitcom One Day at a Time are now hoping that a broadcast network will pick up the show after the streaming giant cancelled it. To make it even more interesting, an increasing number of broadcast networks are now launching their own streaming platforms. 

It’s “just a sign of the times” according to VanDerWerff. “The streaming revolution, which promised to break down lots of barriers in the TV industry, is beginning to morph into something else.”

Part of that evolution has taken the shape of over-the-top TV partnerships. If you sign up for Spotify, you get Hulu for free (or at least for a reduced price). If you’re a Fios customer, you can get YouTube TV for free. 

Bundling is Not a Thing of the Past

VanDerWerff compares these partnerships to the cable bundling that was born way back in the 1980s. 

And they may continue to define the ‘new-and-improved’ TV landscape in response to  so-called subscription fatigue. “Even people who work for the streaming networks understand that having a bunch of streaming networks, all with their own unique and in-demand programming, all asking you to pay between $10 and $20 per month, could end up being catastrophic to consumers,” VanDerWerff concludes. 

In other words, both telecom companies and streaming platforms will have to work together to remain appealing to consumers. 

“The way telecommunications companies react to OTT content and communications will either be the key to their continued relevance or signal a never-ending decline in market share,” writes Kevin Cancilla at Vindicia. 

This is where the bundling partnerships we’ve seen pop up the past couple of years come in

The Enemy of My Enemy is My Friend?

These new partnerships are tenuous at best, primarily since they are born out of necessity. According to Brett Sappington at Ecommerce Times, several factors have driven the push for these partnerships: “High fragmentation of content, the success of bundling, polarization in subscriptions and revenues, a low cost threshold for survival, and low awareness of OTT service brands.” At the root of each of these factors is the consumer drive for accessible content. If you don’t offer it, your competitor certainly will. 

Take Hulu and Spotify, for example. Bundling the TV and music streaming services was almost surely a way to stave off competition from Apple. Hulu offers TV, Spotify offers music — Apple will offer both in the form of Apple Music and Apple TV+. And it would be a huge surprise if those two services are not bundled together when Apple TV+ launches later this year. 

In the same vein, the partnership between Verizon and YouTube seems to be a way for YouTube TV to maintain (or grow) market share and for Verizon to appeal to content-focused consumers. 

“The deal underscores Verizon’s ongoing efforts to play nice with third-party content providers to continue enhancing the array of services that consumers have to choose from at Verizon,” writes Ingrid Lunden at TechCrunch. “More options for content helps sweeten the deal and keep people from moving to other services, or away from any bundles at all and opting to create their own a la carte selections, cord-cutter style.”

Both examples of new OTT partnerships highlight what the future of streaming TV is shaping up to look like: consolidated and fiercely competitive.