Editor’s Note: This article is part of our 2018 Preview feature, which looks at the big topics facing the industry next year. Click here for the 2018 preview in wireless, click here for the 2018 preview in cable and video, and click here for the 2018 preview in the wireline industry.
Earlier this month, T-Mobile CEO John Legere earnestly declared his intention to fly the “Un-carrier” flag into the pay TV market, deploying a disruptive service that would allow customers to watch their broadcast and cable channels on any device they want, without CPE, contracts or any other B.S.
Analysts, for the most part, were a bit vexed.
“Isn’t video—or, OTT video, at least—already delivered anywhere?” asked MoffettNathanson analyst Craig Moffett.
Indeed, Legere’s declaration came off as naive to anyone who has been tracking the pay TV market in a year that already saw disruptive product launches from Hulu and YouTube. Indeed, the virtual MVPD market, which added nearly a million users in the third quarter, is jam-packed right now.
A year ago, AT&T’s DirecTV Now joined seminal offerings Sling TV from Dish and Sony PlayStation Vue. This year, Hulu Live and YouTube TV joined the fray. And there are a number of other upstarts, such as fuboTV.
With linear services losing nearly 3 million video customers through the first three quarters of 2017, it’s obvious that virtual services are cannibalizing the traditional pay TV market to some degree.
The question going forward into 2018 is, how much will they disrupt each other? Or, to put it more bluntly, there just can’t be room for 10 subscription video services, all priced around $35-$40 a month, all delivering the same basic skinny package of ESPN and the Big Four broadcast networks.
“I think, over the next 36-48 months, we’re going to see a volatile period of entries and exits,” said Ben Smith, head of experience for Hulu, in an interview with FierceCable last spring just after the launch of Hulu Live.
Indeed, the vMVPD market looks a little bit like the elimination round on "Survivor," with operators aggressively touting benchmarks such as how many local stations they've signed up, all in a desperate attempt to separate themselves from the herd.
The coming 12 months certainly should be interesting. Hulu, for one, has put together what appears an unstoppable mix, pricing a popular SVOD platform with a virtual pay TV service for under $40. But what will happen to Hulu Live once Disney takes over Fox’s share of Hulu’s ownership stake and turns the digital video company into the tip of a spear aimed right at the heart of Netflix?
Will Sony continue to support Vue? Nearly three years after launch, Sony still hasn’t announced user metrics for its vMVPD play.
And can Dish’s Sling TV, which has gathered around 2 million subscribers in nearly three years of operation, sustain its leadership position after surrendering in the race to sign up local broadcast stations to retrans deals?
Indeed, we believe that in 2018, at least one vMVPD contestant will be voted off the island.