MVPD Lite: Why The Biggest Threat To The New Skinny Bundles Is From TV Everywhere

It’s not all that surprising that two of the first companies to introduce online-only “skinny bundle” packages were Dish and Direct TV, two pay-TV providers that don’t also provide internet service. It was a smart move on both their parts, because the biggest threat to these new services is not going to come from internet companies like Hulu and YouTube, but rather from established pay-TV providers who are just going to spin off their newly resurgent TV Everywhere (TVE) apps, bundling it in with broadband service to create a very attractive offering.Allow us to explain.TVE has been hiding in the shadows these past few years as Nielsen figures out Total Audience Measurement (TAM), its system to count all those views on tablets, smartphones, laptops, desktops and connected devices like Roku and Apple TV.Since those views have not been counted to date, the networks have put fairy tight restrictions on TVE under the theory that “we’re not getting paid for those views, so why should we encourage them.”But it looks like Nielsen TAM will finally be in place this summer, at which point the networks will eliminate all those previous restrictions on the new theory that the more places people can watch their shows, the more chances they have to improve their ratings and make more money.So look for your local cable company or telco to roll out new iPad and Roku apps that give you access to all the linear and VOD programs you currently have access to via your set top box, along with access to anything on your DVR.Once they’ve successfully rolled that out (and unless they do that-thing-they-do where they ignore user experience, the new apps should be very successful, as there is much pent-up demand for them), it's time for Stage 2: selling a “lite” version of the TV Everywhere app to younger viewers and bundling it up with broadband service. So that say, Charter’s monthly broadband-only fee might be $90, but they’ll then give you the chance to pick one of three different web-only levels of their TVE app, starting with a pared down Sling-TV clone for just $19/month (versus $25 for Sling).If you want a super-robust version of their TVE package, they can sell you that too, something that gives you HBO, Showtime and the full range of kids and sports networks plus 50 hours of DVR space. And your broadband connection. Because it's their ability to sell you that—broadband plus web-only pay-TV at a deeply discounted price, that is going to make these deals so appealing to consumers.For the MVPDs, the deep discounts are a very smart investment: if they can get younger viewers into their ecosystem now, they can mine their data immediately and then try and upsell them for the rest of their natural born lives. Or to put it into dollars and cents, keeping customers is a lot cheaper than acquiring them.Just about every MVPD is going to be offering some variation of this service. Verizon and AT&T can conceivably even throw mobile service into the mix too, providing zero ratings caps to their customers who watch on mobile (e.g., the hours they spend watching TV via their mobile accounts does not count against their data caps.) It’s going to greatly expand the number of online-only TV services, and that is going to make it tough for all the existing players—none of whom provide internet access—to hold on.The time frame for all this is pretty quick too—we can see a number of these new TVE Lite services launching later in 2017 or early in 2018, especially if the relevant rights deals are already in place as we believe they are.Interesting times indeed.