vMVPD subscriber growth is slowing, prices are rising, and companies are failing. All this at a time when more people are migrating online for their TV and should be likely to sign up. Does this mean companies like Sling TV and YouTube TV are a short-term solution for consumers or have a long-term future in today’s video mix?
vMVPDs at the crossroads
The virtual MVPD business stands at a crossroads. The early days of explosive growth have tapered off to be replaced by incremental progress. For example, between Q4 2016 and Q4 2017, Sling TV added a million subscribers to reach 2.2 million. Over the next two years, it grew only 500,000 more, hardly increasing at all in 2019.
What’s more, we have seen the first major failure in the market. PlayStation Vue, one of the early entrants, closed at the end of January 2020.
Moreover, all providers in the market are increasing prices. For example, Hulu just increased the price of its Live service by 22%.
Meanwhile, consumers continue to abandon traditional pay TV in droves. nScreenMedia estimates that cable, satellite, and telco TV lost 7M customers, while vMVPDs added less than half that number.
How do vMVPDs fit in with today’s evolving TV viewer behavior? Many consumers seem to be rejecting the whole notion of traditional pay TV while others carry it with them as they migrate online.
At the Digital Entertainment World conference in LA last week, I moderated a panel discussion entitled Today’s video mix: OTT, Cable, and Linear Television. I took the opportunity to ask the panel of experts if they thought vMVPDs are a short-term solution or if the businesses are here for the long-term. Here’s what they had to say.
Consumer behavior moving away from linear
Paul Cabana EVP, Head of Multiplatform Programming for History, Biography, A&E and Lifetime, believes consumer behavior is evolving beyond traditional TV:
“They’re a short-term solution. Look at our own behavior, in terms of where we are finding TV. Where is vMVPDs in our own mix? It’s part of such a complex patchwork. The horse has left the stable in terms of all the other places people can go.”
vMVPDs solve a consumer need
Michael Cohen, President of Whistle, sees vMVPDs as continuing to deliver a valuable television experience that has proven its long-term value:
“I think they are a long-term solution, but some of them are short-term businesses. It’s solving a consumer need. I think the model is staying; it’s a question of who will be around, who will prevail.”
Delivering the familiar in a new domain
Hale Boggs Partner, O’Melveny & Myers LLP, believes that the familiar pay TV environment is still something consumers crave, even as they move their viewing online:
“I think it’s longer-term <solution.> Notwithstanding all the cord-cutting, having that channel guide and just being able to click on something and see it, and have a choice. I think that’s something consumers like.”
The best experience will win out in the long run
Ed Laczynski, CEO of Zype, thinks that if the industry can deliver excellent experiences, it will survive. However, that doesn’t mean all participants will survive:
“I’m kind of in the middle. I think it’s long-term in that companies that have the most focus on product and user experience, I think, have long-term prospects. For example, I think that YouTube TV is doing a great job.”
My panelists at DEW are split on whether vMVPDs have a long-term future. What do you think? Will vMVPDs still be around in five or ten years? Post your thoughts below.