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.
1. YouTube TV price hike reminds everyone vMVPDs are still cable TV
YouTube TV added a bunch of channels from Viacom and raised their monthly fee to $65/month and suddenly the whole industry woke up and realized “virtual MVPDs! They’re just like cable TV...only digitally delivered!”
You know, that thing we’ve been saying for the past few years, especially when the trades would call vMVPD subs “cord cutters” and include them in “here’s why pay TV is dying” stories.
Why it matters
There’s also the whole “skinny bundle” thing—with the exception of Sling TV and Philo, these bundles haven’t been “skinny” for a few years now. Zaftig is more like it. Hulu + Live TV, AT&T TV Now, fuboTV and YouTube TV all have somewhere north of around 70 or 80 channels, including (these days) all of the major network groups.
To insert my personal experience here, I have had Hulu + Live TV for a few years now, and, other than PBS, I could not tell you a channel I can’t watch on Hulu. They even have YES, so I can watch Brooklyn Nets games.
Which makes sense because if you were giving up your traditional pay TV service for something more portable, why would you pick a system that, say, was missing Disney/ABC or Discovery and all the channels in their universe when, for a few dollars more, you could get the full package from another vMVPD?
The price thing isn’t surprising either. We’ve known all along that the vMVPDs were doing the Silicon Valley “boil the frog” thing where they use artificially low pricing to lure consumers in and then slowly raise prices, figuring that consumers won’t notice the heat of another $5-$10 a month, especially if it only happens a couple of times a year.
Even at $65/month, YouTube TV is a steal. The fact that you’re not paying nearly $15/month for each set top box alone makes it well worth it. And that’s before you get to the improved interface and ease of use (no more switching inputs from cable box to Roku every time you want to watch Netflix!)
But here’s the rub: these full-figured vMVPDs may wind up being an interim solution.
Because as the Flixcopalypse gets into full swing and we have eight multi-billion dollar SVOD services up and running (I’m counting whatever ViacomCBS is doing in that number), the demand for anything more than a handful of cable and broadcast stations is going to drop fairly precipitously. (And “fairly” may become “very” depending on how badly the economy tanks.)
What you need to do about it
If you’re a vMVPD, you need to start thinking about what a super skinny bundle would look like. Like just the broadcast networks and a handful of cable channels, with news and sports as extra-cost bolt-ons. Because that’s where it’s going.
If someone is subscribing to four or five Flixes, you can figure they’re also tapped into a bunch of FASTs and then how much are they really going to want to spend on traditional pay TV if they’re barely ever watching it? $20? $30? Probably not any more than that. This won’t be everyone, but it will be enough people that you’ll need to make some adjustments pronto.
If you’re just joining us on the whole “a vMVPD is really a traditional pay TV provider with a different type of delivery system” train, welcome aboard.
2. Verizon makes the first move in the MVPD new bundling wars
So as AT&T, Roku and Amazon continue their ‘Carriage Wars For The 2020s’ beefathon, Verizon slipped in a new (though completely expected) wrinkle to the ‘How Will We Bundle Our Flixes’ competition by offering free Hulu and Disney+ with a new Fios broadband subscription.
Because why wouldn’t they?
Why it matters
Unless they’ve got some sort of content or ad play going (Comcast) most MVPDs are making their money from selling broadband subscriptions and pay TV is just this thing that consumers expect them to have that helps with the stickiness thing.
But as the Flixes come into their own and the new TV ecosystem begins to gain steam, offering a bundle of Flixes is going to be a much more effective lure than a bundle of cable networks. And that, my friends, is going to be the next battle--which MVPDs are doing the best job of offering bundles of Flixes (or free Flixes--say that ten times fast) as a way to get new subscribers--and which Flixes do consumers see as most valuable.
It’s really just an update of the “sign up now and get three free months of HBO” deals that MVPDs have been offering forever, but there will be more competition and more options than just HBO and Showtime.
So, look for other MVPDs to start down this path as well, offering special “cord cutter” packages. And, as noted, earlier, look for it to really take off if the economy goes seriously south.
What you need to do about it
If you’re an MVPD you need to be like Verizon and get some good Flix deals going for your broadband subs. You’re going to have real competition soon(ish) when 5G finally gets real, so better to act on this sooner than later.
If you’re a Flix or a FAST, you’ll probably want to start wondering if there isn’t a Plan C, one that gives you more control over your data and your ad revenue.
If you’re a consumer, keep your eyes peeled for good Flix deals from the MVPDs. I’m thinking many of these will be ye olde “unadvertised specials,” so best to stay on top of things.