« Back to Posts

Philo Is Betting On Sports Free Bundles

If reports are correct (and we have no reason to think they’re not), a company called Philo, whose background is as a creator of TV bundles for college campuses, will soon be rolling out a low-priced sports-free bundle for what they hope are the millions of people who don’t watch need to watch sports beyond what’s carried on their broadcast channels.

The new bundle, which will carry all manner of programming options from Discovery, Viacom, Scripps, AMC and A+E (plus the Big 4 broadcast networks) will allegedly cost less than $20/month, making it considerably cheaper than existing “skinny bundle” packages that start at around $35/month.

It’s an interesting play, as there would seem to be a goodly number of people who don’t watch ESPN and other sports networks and would be interested in saving an extra $15/month.

The question is how many of them are there and will they be willing to give up all the other channels in their existing cable bundle in order to save money.

That’s a valid question as no one seems to be making any real money on their skinny bundle/virtual MVPD services. (Though for many of the current players, that’s not really a big issue: providers like Dish or YouTube that already have a solid distribution business can use their virtual services the way Whole Foods uses their newly discounted avocados—as loss leaders to get customers into the system where they can then try and upsell them for the remainder of their natural born lives.)

Why Bundles?

While the notion of bundling together various networks to create “bouquets” of channels (yes, that’s actually what it’s called) gets a lot of bad press, the reality is that for most smaller channels, it’s really their only option.

While CBS can put out CBS All Access and get enough subscribers for it to survive, it’s unlikely that, say, Animal Planet would have the same level of success, at least not in the current environment, where they’d have to sizable capital expenditures for both development and marketing costs.

So bundling channels together into a package that reasonably reflects what users want seems like the way to go for smaller channels, because “strength in numbers” and all that.

The Benefits of Going Sports Free

Sports-themed networks like ESPN are expensive because they pay huge fees to the various leagues to get the rights to broadcast their games. These costs are then passed on to the MVPDs (real and virtual) in the form of higher carriage fees, and then those costs are passed on down to the consumer in the form of higher monthly fees. Eliminate ESPN and you’re able to offer a sub-$20 bundle.

I’ll also posit that one of the reasons there’s a renewed interest in getting rid of sports channels is that the time crunch of our modern society has made watching sports less feasible for many people who once did. Or as a friend recently asked me “who has time to spend four hours on a Sunday watching football every weekend?”

It’s a valid comment, one made even more valid by the glut of options the sports fan is faced with, particularly in September when baseball, football and basketball are all more or less in season.

While we expect sports rights to shake out considerably over the next five to ten years (the seemingly extreme length of that time frame is large due to the length of the agreements currently in place) with the NFL taking a major hit (pun intended) as eSports and niche sports continue to rise, that doesn’t help reduce costs for fans in September 2017.

The “What If” Factor

All that said, there’s still that element of human nature I call the “what if” factor that will be at the crux of any decision to switch to Philo. It’s the same effect that causes us to do everything from overpack (“what if there’s a freak cold snap. I’d better pack an extra sweater”) to delaying marriage (“but what if he’s not the right one?”).

And so too with TV.

I suspect there will be many people who used to watch sports a lot at some point in their lives, before kids and jobs and Sunday errands, who will think to themselves “what if I want to watch a football game on ESPN one weekend?. I could probably find time to watch the last quarter of one. Especially during the playoffs. Do I really want to eliminate that option?”

The answer to that will likely determine Philo’s success, though $15/month is a pretty compelling counterargument.