Retailers enhance subscription services with streaming options

In recent years, a trend has emerged among retailers and delivery platforms seeking to enhance their subscription services by incorporating entertainment streaming options. This initiative aims to retain existing customers and attract new ones by adding compelling entertainment perks to the traditional offerings of free delivery and discounts. Since launching free streaming offerings for Prime members in 2011, Amazon has set a precedent that other companies are now following.

Kroger, a prominent grocery retailer, recently announced an upgrade to its Kroger Boost membership program. As of this month, subscribers will have the option to include one of the Disney streaming services—Disney+, Hulu, or ESPN+—in their membership package, which is available at annual fees of either $99 or $59. Boost members can already enjoy benefits such as free next-day delivery and additional fuel points. Stuart Aitken, Kroger’s senior vice president and chief merchant and marketing officer, highlighted that collaborating with Disney enhances the value and convenience of their program.

The concept of bundling streaming services with membership programs isn’t exclusive to Kroger. Walmart introduced a similar strategy in 2022 by integrating a Paramount+ Essential subscription into its Walmart+ membership. Following suit, Instacart partnered with Peacock last November to offer Peacock Premium to Instacart+ members within the United States. This approach is akin to the practices of mobile carriers such as Verizon, which announced earlier this year that it would offer select mobile customers a six-month bundle of Disney+, Hulu, and ESPN+ (albeit with ads on Hulu and ESPN+) at no additional cost. T-Mobile also gives some unlimited plan users access to ad-supported Netflix subscriptions.

These partnerships primarily involve ad-supported streaming services, which appeal to both retailers and streaming companies. For the retailers, offering added value is crucial to enhancing the appeal of their membership programs and discouraging cancellations. Meanwhile, streaming platforms benefit by increasing the audience for their ad-supported models, thus enhancing their appeal to advertisers.

Eunice Shin, CEO and founder of the consulting firm Elume Group, noted the mutual advantages of these partnerships. For streaming services, expanding the viewer base is essential, as it allows them to charge higher premiums to advertisers. For retailers, the broader array of benefits serves as a deterrent for customers contemplating the cancellation of their subscriptions.

Retail analyst Brad Jashinsky from Gartner underscored that while the primary attraction of subscription services like Kroger Boost or Walmart+ is the free delivery offering, the inclusion of entertainment streaming is a significant supplementary benefit. Customers are strongly attached to streaming services; a Gartner survey from the previous year indicated that consumers value streaming subscriptions highly and would be reluctant to give them up, even when reducing their spending.

Retailers are engaged in a competitive race to diversify the benefits offered through their membership programs, especially in light of Amazon highlighting its Prime benefits. This competition extends to building retail media networks to accommodate advertising in their online marketplaces, thereby increasing membership numbers and striving to emulate Amazon’s comprehensive business model.

Shin remarked that many companies aspire to replicate Amazon’s successful integration of diverse services. However, lacking their own entertainment assets, these companies are leveraging collaborations with streaming services to achieve similar goals. This strategic adjustment seems to be paying dividends, as illustrated by the expanding membership bases and the growing importance of streaming partnerships in the retail sphere.

Source: Noah Wire Services