Spotify, Hulu Team Up For Bundled $12.99 Plan

Streaming competition is heating up, and two of the giants in the space are teaming up to provide a music and video bundle for one low monthly price.

What Happened

Spotify Technology SA SPOT announced Wednesday that it's teaming up with Hulu to offer a bundled Spotify Premium streaming music service and Hulu on-demand video streaming service for just $12.99 per month. The two subscriptions would cost a combined $18 per month if purchased individually.

The two companies have tested the waters on a bundle before, offering the same two services to students for just $4.99 per month last year.

“Based on the outstanding performance of the Spotify and Hulu student package, it’s clear that consumers love to combine their music and television experiences together,” Hulu senior vice president Tim Connolly said in a statement. 

Hulu and Spotify are likely willing to take a hit on margins in order to grow their subscriber bases and wean users off of third-party subscriptions through services such as Apple, Inc. AAPL’s App Store or Alphabet Inc. GOOG GOOGL’s Google Play. Third-party providers can siphon off as much as 30 percent of a service's monthly revenue — Spotify and Hulu made clear that the new bundle package will not be available through third-party providers.

Why It’s Important

Media investors know the future is streaming, and the massive market is still in its infancy. At this point, subscriber growth is a top priority for most music and video streaming companies as competition ramps up. For customers, that means discounted membership rates and bundle packages that could provide some excellent deals.

Investors will be watching closely to see how well the music/video bundle performs. If it's well-received, Apple, Pandora Media, Inc. P, Netflix, Inc. NFLX, Walt Disney Co DIS and others could offer their own bundles in the near future.

If Disney’s proposed buyout of Twenty-First Century Fox Inc Class A FOXA is completed, Disney will hold a majority ownership of Hulu. Disney is also planning to launch its own streaming video service starting in 2019.

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Photo courtesy of Hulu.