The era of the mega-bundle in streaming is coming, TD Cowen analysts say. Here’s how it could shake out.

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A mega-bundle of streaming services could soon materialize, TD Cowen analysts predict.The analysts argue it’s a better model for traditional media companies and customers alike.However, market leader Netflix may not need to bundle — at least in the short term.

Traditional media companies that have launched stand-alone streaming services should pivot hard, TD Cowen analysts argued in a recent report.

The analysts say Warner Bros. Discovery, Disney, and Paramount should return to the wholesale business rather than continuing to build direct-to-consumer products.

Their overall vision is a “mega-streaming bundle” distributed by Apple, Amazon, Google, or cable companies like Comcast.

“Everyone’s producing more content than they used to,” Doug Creutz, a senior research analyst at TD Cowen, told Business Insider. “Everyone’s advertising for their content more than they used to, and consumer dollars haven’t increased that much.”

A bundle would help players spread the risks associated with content marketing and production. Creutz said he foresees a bundle happening in the next two to three years.

“Bundling is the right way to go,” Wedbush Securities managing director Michael Pachter told BI, similarly predicting a three-year timeframe. Pachter said a bundle would aid content discovery in a fragmented content landscape and make subscriptions stickier.

TD Cowen predicted that WBD and Disney would see single-digit DTC profitability in 2025 and that Paramount and Comcast would reduce their DTC losses. But Creutz said the picture isn’t improving enough to make these DTC efforts the best path forward. He said Disney+ had already expanded into essentially all the markets it can — though its standalone ESPN product remains an open question — and Comcast and Paramount still aren’t close to DTC profitability.

Creutz added that streaming services are trying to reach profitability by variously cutting spending, increasing ad loads, and raising prices.

“You’re heading to a place where the consumer experience is getting significantly worse,” Creutz said.

A potential obstacle to Netflix’s world domination

The big player that doesn’t need to bundle imminently is Netflix, which appears to be the clear winner of the streaming wars. (Apple and Amazon exist somewhat separately, Creutz added, given their streamers are tied to other business objectives.)

Netflix recently reached a larger market cap than Comcast, Disney, Paramount, Fox, and WBD combined, as media analyst Rich Greenfield noted.

A Netflix spokesperson pointed BI to its Q3 shareholder letter, which said the breadth of its content made bundling unnecessary — unlike for competitors.

That doesn’t mean Netflix couldn’t be impacted by a potential mega-bundle, however. Creutz said that while Netflix has a “huge advantage” competing against streamers individually, a mega-bundle “could be an obstacle to their path to world domination.”

And Pachter said bundling could be welcomed by Netflix if the streamer could dictate the terms.

Disney is another company that complicates the picture. Creutz said the Mouse House harbors ambitions of being the last man standing with Netflix, and if its stand-alone ESPN product succeeds, “then I think their need for other people diminishes.” Disney also offers its own in-house bundle of Disney+, Hulu, and ESPN+.

That said, Disney has already shown a willingness to bundle with outside companies. It partnered with WBD on a service that includes Disney+, Hulu, and Max.

Creutz acknowledged that assembling a bundle would be difficult, likening it to “herding cats.” Other outstanding factors include David Ellison’s plans at Paramount, and the speed of linear TV deterioration.

There could also be regulatory challenges. TD Cowen referred to recent developments at Venu as “a step backwards,” after ESPN, Fox, and WBD killed the sports streaming venture amid legal headwinds.

For his part, Pachter said he felt a bundle hadn’t happened yet because of inertia.

“Everybody’s too inwardly focused and looking at the past,” he said.