illustration of the number five, representing the five subscription business topics for this column, Five-on-Friday

Five on Friday: Merging, Munchies and MLB

Featuring Discovery, Apple, DoorDash and Amazon Prime

After nearly a year of planning and approvals, WarnerMedia and Discovery have completed their merger, but that’s not the only subscription news we have this week! DoorDash launches a DashPass subscription for college students, and Apple streams a few MLB games with a few bumps along the way. We’re also looking at Amazon Prime’s price increase – will it deter subscribers? Speaking of Amazon Prime, Robert Skrob takes a deeper dive into why the FTC is investigating Amazon Prime’s subscription practices.

WarnerMedia and Discovery Inc. Complete Merger

New discoveries are on the horizon with WarnerMedia and Discovery finally completing their merger. Investors approved the multibillion-dollar deal last week, allowing AT&T to offload WarnerMedia to Discovery, according to The Verge. The companies will combine to form Warner Bros. Discovery, allowing them to be a stronger competitor in the streaming space, invest in more original content, enhance programming options across linear pay TV and broadcast channels, and offer innovative video experiences and choices for consumers.

Of the merger, AT&T said in a press release that they were expecting to invest at record levels in their growth areas of 5G, as well as fiber, and would continue to work on becoming America’s best broadband company. Another primary focus for the company would be sharpening their focus on returns to shareholders. The merger will also allow AT&T to pay off its $157 million debt. AT&T will receive $43 billion in a combination of cash, debt securities, as well as WarnerMedia’s retention of certain debts. AT&T shareholders will receive 71% ownership in the new company, and Discovery shareholders will own 29%, as we reported last month.

David Zaslav, who currently leads Discovery, Inc. will lead the combined company. In a report from Variety, WarnerMedia’s HBO Max had a combined 73.8 million subscribers, and Discovery had 22 million. Discovery stands to absorb all those subscribers. Discovery executives have confirmed long-term plans to combine HBO Max and Discovery+ into one platform under Warner Bros. Discovery. We can expect exciting things from this entertainment powerhouse.

Warner Bros. Discovery logo

Apple Streams MLB Games for Friday Night Baseball

Apple TV+ has started to introduce sports programming, beginning with MLB’s Friday Night Baseball.  The streaming service, however, caught some flack for how the debut of the programming went down. Their first games streamed were the New York Mets against the Washington Nationals, and the Houston Astros against the Los Angeles Angels, and fans were unable to watch the streams as planned.

Apple will offer free broadcasts of two exclusive MLB games each week, reports CNBC. For viewers, watching the game will be similar to the experience of watching it on broadcast television, but with a few bonus features. Viewers will be able to ask Siri for player stats or listen to a player’s at-bat song via Apple Music. Apple will also feature pre-game and post-game coverage.

Man is watching baseball match on TV and holds remote controller in hand
Source: Adobe Stock Photos

This feature is free for all users for now, with no need to subscribe to Apple TV+. Apple will be streaming two games a week on Friday nights. Without the need to subscribe, this could allow for a potential draw for new subscribers to Apple TV+ and boost their audience.

However, the first broadcast struck out. The Verge reports that several fans said their broadcasts were interrupted during the game, even though their internet was working just fine. When streams cut out, users were met with error messages saying, “There’s a problem loading this video. If this continues, check your internet connection.” Deadline says most errors were within the Washington Nationals and New York Mets game, and DownDetector.com had 153 reports within eight minutes of the game beginning.

FanSided also reported that fans were unhappy with the announcers of the game, citing that they wished they had someone that seemed more familiar. Other complaints, cited by iMore, were around getting signed into Apple TV+, creating an Apple ID, or getting the stream to work on other devices. Hopefully, Apple has corrected the problems so baseball fans can enjoy two freebies each week.

Amazon Prime Price Increase Won’t Deter Customers

In a new report from Parks Associates, they disclosed that they don’t think the price hike will deter Amazon Prime customers, despite a $20 per year increase. The company has too much to offer, making their Amazon Prime membership sticky.

For example, new data from the firm’s OTT Video Market Tracker, it shows that Amazon Prime Video penetration reached 45% of US internet households in Q3 of 2021, according to Fierce Video. In Q1 of 2021, Amazon Prime members are estimated at 77.3 million households, with 71% of those households utilizing Prime Video. Amazon Prime hit the 200 million member milestone globally in April of 2021, and there were 172 million US Prime members in Q4.

The shopping service’s subscription started increasing its prices in February, from $119 to $139 with new customers, and started rolling out to existing customers last month. This is Amazon’s first price increase for Prime since 2018. When raising their prices, they cited inflation and the rise in wages and transportation costs.

Video continues to be one of the key features of a Prime membership, and with heavy investments in this sect, they could still strive to get high marks. With the debut of their trailer for Lord of the Rings during the Super Bowl, it showed that they had high hopes for their entertainment sect.

On top of this, they also announced their acquisition of Hollywood studio MGM last month, which  further solidifies their position as a content library to be reckoned with. This is Amazon’s second largest acquisition after Whole Foods. This deal is valued at $8.45 billion, and will bring more than 4,000 films, 17,000 TV episodes and intellectual property like James Bond into the mix.

If that wasn’t enough to keep Amazon Prime members happy, the company signed a deal with the NFL in 2021 to stream Thursday Night Football, and it could expand into offerings like Sunday Night Ticket in 2023. More sports could help Amazon stand out from the crowd of other streaming services, especially with Apple TV+ beginning to offer sports in their streaming portfolio.

DoorDash Launches Discounted ‘DashPass’ for College Students

While everyone seems to be raising their prices right now, DoorDash is coming in as an unsung hero to college students. This week, they announced their latest launch: a discounted tier of DashPass available to college students. With DashPass for Students, students can access the DashPass subscription for half of the going rate at $4.99 per month, or $48 per year. Student subscribers can take advantage of $0 delivery fees as well as lower service fees on orders that meet a minimum subtotal. They will also receive a 5% credit back on pickup orders, $0 delivery on grocery orders, and lower service fees. DashPass members are also able to access members-only promos and exclusive menu items. 

“A student membership pays for itself in just one order,” says the DoorDash website.

DoorDash is looking at a section in the market that looks to be previously untapped. In their press release announcing the launch, they cited a survey of 500 college students and their eating behaviors. The study found:

  • 70% of college students order food from a third-party delivery app in a typical week.
  • On average, college students order four times a week.
  • More than a quarter of students spend more than $100 per week on food delivery.
  • Nearly 3 in 4 college students said they’re most likely to order food delivery when studying for midterms or finals.

DashPass launched in 2018, and this launch expands their reach. TechCrunch reports that new users to DoorDash can get a free 30-day trial when signing up for the new student subscription option. This membership option will be available to “all undergraduate and graduate students at accredited colleges and universities in the US,” The Verge said. Students will have to verify their student status with SheerID to ensure they are an active student, but they can cancel their membership anytime.

Image courtesy of DoorDash

Why the FTC is investigating Amazon Prime

A few weeks ago, we wrote about the Federal Trade Commission’s investigation into the enrollment tactics of Amazon Prime. The FTC is specifically interested in whether the company is using, or has used, manipulative language, user experience, design and other tactics – called dark patterns – to entice unsuspecting shoppers into signing up for a costly Prime membership. In addition, the FTC alleges that Amazon Prime has made it difficult to cancel.

Membership retention expert Robert Skrob breaks it down here, while also sharing tips on how to be compliant with the law and provide a good subscriber experience – even if they are canceling their subscription.

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