vMVPD market shakeout won’t happen in 2018, analysts say

watching video on smart phone
Analysts say vMVPDs including YouTube TV are several years away from having their market shake out on them. (YouTube)

DENVER—With more than a half-dozen virtual pay TV services offering similar skinny bundles of channels and roughly congruent price points, Fierce Editor-in-Chief Mike Dano asked a panel of video industry analysts which vMVPD will be the first to succumb.

The group, however, didn’t bite, forming a consensus that these are the early days for the virtual MVPD industry. Despite rampant competition for subscribers, high programming costs and loss-leader price points, none of the operators seems close to cutting bait, they said.

“That’s like walking into the baby section of a hospital and saying which one of these children is going to survive,” quipped Brett Sappington, senior director of research for Parks Associates, during the closing panel for the Pay TV Show, an event produced by Fierce parent company Questex. 

“We’re at the earliest part of the curve,” added Sappington, who said he doesn’t expect any vMVPD attrition to occur until at least 2019.

However, one analyst was willing to play the moderator’s little game: Joel Espelien, senior analyst for The Diffusion Group. “I think fuboTV is vulnerable based on cash flow,” he said, referring to the startup, which just added another $75 million to its VC coffers last month. 

Other panelists, meanwhile, noted that migration of pay TV customers to vMVPDs is rendering the cord-cutting discussion, in the words of one panelists, “BS.”

“If you look, 70% of the people cutting the cord are going to services like DirecTV Now,” said Alan Wolk, co-founder and lead analyst for TV[R]EV.

“The definition of pay TV has to be changed,” added Michael Goldman, director of television and media strategies for Strategy Analytics. “The real definition now should include the virtual vMVPDs.”

Espelien, however, noted the low margins of vMVPD services as rendering the sector a hollow replacement for traditional pay TV services. 

“I think there’s an analog dollars to digital dimes scenario going on here,” he said.