Wolk’s Week in Review: vMVPDs hit 10M mark, more details on VCBS-Flix

TV[R]EV Week In Review
(TV[R]EV)

Well-known industry analyst Alan Wolk is publishing his popular Week In Review columns first on FierceVideo every Friday. This means that FierceVideo readers are the first to get all Wolk's insights as they navigate the fast-moving television business.

Wolk's Week In Review

1. vMVPDs hit 10 million mark

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As per MoffettNathanson, vMVPDs, the digital pay TV services originally known as “skinny bundles” now have around 10 million viewers. That’s a remarkable growth surge in just three years, especially given that most subscribers seem to be coming from other services.

Why it matters

One of the many, many, many reasons that all those “Massive Wave of Cord-Cutting” reports are so irksome is that they count the shift to vMVPDs as “cord cutting.” 

It’s not.

It’s “cord shifting” if you need to give it a name, but basically it’s just another delivery mechanism for pay TV, and it’s no different from cable than satellite and we don’t call Dish and DirecTV subs “cord cutters.” (Though given the number of DirecTV subs who cut the cord in 2019, perhaps we should…)

vMVPDs are also no longer skinny bundles. If anything, most of them are sort of mesomorphs, with 80 to 100 channels, including all of the major network groups. (PBS is the lone holdout, and even it signed a deal with YouTube TV recently.)

Even RSNs (Regional Sports Networks) have gotten in on the action.

That’s why vMVPDs have become so popular—viewers don’t feel like they are giving anything up when they switch, and if anything they are gaining a lot—an easier-to-navigate interface, full TV Everywhere capability and significant cost savings.

To be real though, that latter point is likely the main impetus for the switch—I know that personally, when I switched to Hulu Live TV I was shocked to learn that I’d been paying $36/month for three set top boxes on top of the $100+/month I was paying for hundreds of channels no one ever watched. 

So even though the price of Hulu (and all of the vMVPDs) has been steadily creeping up over the last two years, they’re still a serious bargain compared to MVPD bundles.

Interface is another huge boon for vMVPDs, as one of the biggest problems the MVPDs faced was the consumer perception that they were paying “Nordstrom prices for Kmart service”—over $100/month for an interface that looked like it was last updated sometime in the late 90s. 

Compare that to something like the aforementioned Hulu Live TV, which features a strikingly designed library-based interface that launches with relevant recommendations--for instance, it will have a Brooklyn Nets game as the first recommendation since it’s learned that I watch a lot of Brooklyn Nets games. (A somewhat masochistic activity this season, unfortunately.)

While MVPDs often discounted the importance of interface design, it’s notable that the most successful vMVPDs  (Hulu, Sling and YouTube) all pay attention to interface and look notably better than traditional TV. 

And that’s before you add in another key vMVPD feature, which is that you can watch all your TV from the same device, no more trying to find the TV remote to switch back and forth between the set top box and the Roku. 

While 10 million viewers out of around 85 million viewers overall (that’s just under 12%) is a sizable number, the bigger question is how long these mesomorph bundles can last, given the Flixpocalypse.

Our TV[R]EV opinion is that they will need to look at creating SuperSkinny bundles, maybe just the broadcast networks with sports, news and non-fiction as additional cost bolt-ons. That’s because as the eight Flixes all come into their own, viewers will spend most of their time watching Flix content and will then wonder why they’re paying $60 for a cable package they rarely look at. 

If vMVPDs can bring the cost of pay TV down to say $15/month and then bundle that together with discounted subscriptions to any number of Flixes, they’ll have a package that consumers might actually want.

Which is not to say they should give up the mesomorph bundles—there will still be demand for those, as there is still a sizable audience that wants to watch network TV and is unimpressed by/uninterested in the Flixes.

Much further down the road is the very real possibility that all of the major broadcast networks move their linear feeds to their Flix, but that’s probably at least five to ten years from now, a lifetime in the world of television.

What you need to do about it

If you’re a vMPVD, celebrate. (Ot at least a vMVPD that isn’t owned by a phone company.) This is your moment and chances are your service is about to grow even more explosively over the next few years as consumers move all their viewing to apps.

If you’re one of those reporters who keeps writing about the “massive wave of cord cutting” because you lump vMVPD subscribers in with actual cord cutters…it’s time you got cancelled.

If you’re a local affiliate and you’ve resisted signing up with the various vMVPDs, time to get with the program. Local broadcasters are in a precarious enough position. Losing out on access to 10 million potential viewers is just foolish.

If you’re an advertiser, remember that vMVPDs offer digital delivery. Which means you can take advantage of all those digital advanced advertising and targeting tricks.

2. More details on VCBS-Flix

ViacomCBS had an earnings call last week, which allowed it to shed some light on the new VCBS-Flix, starting with an acknowledgment that yes, CNBC was right, it’s going to happen.

Why it matters

The app will be built off the tech stack CBS All Access was built on. This is a smart move in that they’ve had a good five years to make sure that tech stack works as it should and to refine things like UX as well.

The new service will have 30,000 episodes of TV and up to 1,000 movies, CEO Bob Bakish reported, and while it’s unclear what the name will be (I’m thinking they’ll change it from “CBS All Access” but who knows) they did come up with the decidedly unsexy catchphrase “House of Brands” to describe it. (Sorry marketing team, but that sounds like a strip mall based retailer that sells Tommy Hilfiger irregulars and seconds at significant discounts. Not a TV network.) 

In keeping with the theme, however, there will be a “programming council” under Showtime CEO David Nevins to explore which shows go in which parts of the Flix.

Mostly though, it matters because it confirms that VCBS, like NBCU and AT&T, is trying to figure out how to weave the disparate pieces of its empire (including premium services like Showtime and the newly launched BET+) into a single app that doesn’t undermine its legacy linear businesses, while setting a path for a future that may eventually see them porting those linear broadcasts on to the app.

Not an easy problem to solve.

What you need to do about it

If you’re VCBS, remember that simpler is better as far as consumers are concerned, that the less choices they have to make, the happier they are. And so the less you can make people feel like they’re picking a circa 2012 cell phone plan, the better.

If you’re the VCBS ad team, this is a great opportunity to introduce some really great new advanced advertising products. 

And if you’re an investor, remember that the quality of the content is far more important than the quantity.

Even on TV.

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