Pay TV operators brace for an app-based future

MobiTV just scored another $50 million in funding to expand the availability of its Connect platform service. (MobiTV)

Increased streaming competition and shifting consumer demands have made traditional pay TV a tricky business to be in right now. App-based solutions are becoming a more viable option, especially for smaller operators.

MobiTV Connect is one of those solutions. Connect has been picked by 90 operators since first launching 2016 and this week the company raised another $50 million in funding from Oak Investment Partners, Ally Financial, and Cedar Grove Partners to help pay for international expansion.

MobiTV CEO Charlie Nooney said the money will help his company stay competitive in a crowded IPTV space – with rivals including TiVo – over what he said will be a very critical 24 months.

“If you’re going to compete against OTT providers, it will be very difficult if your cost structure is upside down,” said Nooney. “We’re seeing a lot of operators looking to long-term turn down their headends and really become more competitive in the TV space with OTT providers.”

MobiTV offers an end-to-end TV platform service, and also offers hosted streaming delivery rights from programmers including A+E Networks, AMC Networks, Disney and ESPN Media Networks, Showtime and Viacom. The company has an agreement in place with the National Cable Television Cooperative that allows NCTC members to negotiate licensing deals for MobiTV Connect. Rich Fickle, president and CEO at NCTC, said it’s helped his organization’s members update their video experiences.

“Our members may not have the resources to build solutions from the ground up, but they know that the transition to an IP-based infrastructure is highly beneficial,” Fickle said in a statement. “We reviewed proposals from 20 different companies and found MobiTV further ahead and more nimble than most of the other choices.”

MobiTV Connect continues to gain momentum despite the video space becoming more and more hostile for both large and small operators. Charter and Comcast have both altered their messaging to focus more on their connectivity businesses and have said that chasing low-revenue traditional video subscribers can’t keep happening. WOW! has begun selling virtual MVPD Philo directly to its customers. Cable One said offering video services doesn’t help with churn. One small operator in Montana, 3 Rivers Communications, said it’s going to throw in the towel all together on video.

Amid the struggles, other vendors including Evolution Digital are positioning themselves as more cost-effective, flexible options to either continuing to slug it out in a tough pay TV space or calling it quits on video. Evolution Digital last week scored a new customer in Vast Broadband, which will use the company’s eVUE-TV IP content delivery platform and eMERGE user interface to deliver live TV, VOD, network DVR and other services to its more than 57,000 residential and business customers nationwide.

Chris Egan, CEO and co-founder of Evolution Digital, said legacy equipment has held traditional providers back from being able to compete with the rise of feature-rich streaming platforms.

“By moving to an app-based all-IP video delivery platform, a small or mid-sized operator can now merge its full video offering with all OTT content available through one innovative user interface on smaller, less expensive and more powerful devices,” he said.

Michael Goodman, director of digital media strategies at Strategy Analytics, said that app-based video solutions are probably still a bit of a trial for operators so they can see how the uptake is and how it affects the books. He sees benefits like strengthening the broadband product by having an IP-based video service. He said it’s still not clear if app-based TV products will increase video revenues for smaller operators but he said it definitely reduces costs.

“I could very easily see a day when they stop offering their own video,” Goodman said of smaller pay TV operators.

Nooney compared the current transition from legacy distribution systems to IP- and app-based television to the transition from wireline to wireless phone services. He said that a lot of time, effort and resources were put into fixed phone lines and that it became standard operating procedure. He said that was coupled with concerns over dropped calls and other potential issues with cellphones.

“Now you look back on it and it almost seems silly,” he said, pointing toward how much the major players have shifted their investments toward wireless service. “I think this is a very similar transition, and it actually happens quicker than you anticipate.”

Nooney said that when MobiTV entered the app-based TV space a few years ago, he was hearing a lot more operators discussing the nuclear option like 3 Rivers. But now, he’s hearing more that app-based solutions are giving operators the chance to deliver video more efficiently and maintain the economics of double-, triple- and quad-play pricing strategies.

“At the end of the day, everyone makes their business decisions. But we firmly believe that video is key to stickiness in the household,” said Nooney. “I would really look carefully at the economics before you make that final decision.”