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This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
A flurry of tech bundles has returned consumers to a fundamental American question: “Would you like fries with that?”
As Walmart (WMT) chases the industry-defining success of rival Amazon Prime (AMZN), it’s now offering members of its paid loyalty program discounted meals at Burger King. In Walmart’s case, the retail giant is literally prodding its customers with more savory calories.
Verizon (VZ), in a bid to bolster its own subscription revenue, will now offer 12 months of Netflix’s (NFLX) premium plan for free to customers who purchase a year of the National Football League’s streaming service.
Bundling in the app era is an evolved form of upselling that cloaks itself in value. We unbundled cable television only to reconstitute it. Now we’re subscribing to cheeseburgers.
But what at first looks like a soft-pedaled sales pitch from companies (and their executives) that simply want new offers to tout starts to build real animosity when it’s price hikes by another name.
A recent example here would be the $1,700 Snoo Smart Sleeper, whose maker recently introduced a premium subscription model to ply newly sleep-challenged parents with extra smart bassinet features. In recent years, luxury carmakers have sought to charge a fee for features like heated seats, only to backtrack on these plans.
Ultimately, companies are looking for their own version of a “real bundle,” with an offer as good as free shipping on almost anything or unlimited access to almost every song ever recorded. And are the improbable logistics behind realizing you need paper towels and then having someone place them at your front door in the middle of the night even replicable? Probably not.
But consolidation can be an efficient way to give customers value and make a ton of money — just ask the cable bundle.
The planned sports streaming venture Venu — backed by Disney’s ESPN (DIS), Warner Bros. Discovery (WBD), and Fox (FOXA) — was pitched as the ultimate bundle in a discombobulated media landscape. But a judge put its launch on ice as part of an antitrust lawsuit brought by FuboTV (FUBO).
Indeed, it seems the value there might’ve actually been too good. At least for now.
And as this newsletter has argued previously, sometimes a business just makes sense as a subscription, as in the case of beleaguered exercise bike maker Peloton (PTON), which was done in by the cost of its bikes not its monthly fee.
The idea of one-stop shopping, or something close to it, has its benefits. Buying a small mountain of Goldfish crackers followed by a $1.50 hot dog at Costco (COST) sounds like a nice deal. Long-term shareholders for the warehouse operator would agree. But how many versions of that proposition can the market support?
Too often, recurring add-ons and tit-for-tat pricing schemes feel like hostage-taking. And seen in its most negative light, companies are attempting to take any shot at drawing recurring revenues out of their customers and hoping they stick around merely because they forgot to leave.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
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