The REVisionists: COO Mike Keyserling on Philo's Skinnier Bundle
TVR: What makes Philo different?
MK: Philo is a really focused set of entertainment content. We like to think of it as entertainment, lifestyle and knowledge. So it's 58 channels of TV for only $20 a month. That portfolio includes content that people love, like the A&E networks, AMC, Scripps, Discovery and Viacom. But yet for $20, the goal isn't to just build the cheapest product experience. It was really to build the best, and so you're getting live TV, you're getting 35,000 hours of on-demand content, and you're getting an unlimited DVR, all for that low $20 price point.
TVR: And you’re differentiating from YouTube TV, Hulu with Live TV, from the virtual MVPDs that look more like old-school cable systems, right? It’s a different approach.
MK: Absolutely. I think what you're seeing is a lot of the vMVPDs these days have gravitated towards the same thing: the broadcast networks and their associated cable channels with some flavors here and there. If anything, we're a little more complimentary to those services than being competitive. There's a number of services that are in that 50-something dollar price point. I think because we've opted to not include the sports and not include the local broadcast affiliates, that is what allows us to really offer (Philo) at a much lower price point.
TVR: It seems likely there will be a crunch at some point about price and people's wallets. The reason why (many customers of skinny bundles) were leaving traditional cable was not that they didn't like bundles of content. They didn't like expensive bundles of content.
MK: Yeah, we couldn't agree with you more.
TVR: Are we going to see more bundling? You have a nice model here but it seems like people are still going to have to piece together their TV. But at least they can have more control. Isn't that part of the deal?
MK: Absolutely. With every new service launching, people are more and more comfortable with cobbling together the right set of content. There's really never been a better time to be a TV consumer, because of the amount of amazing content out there. But it gives you this opportunity to pick and choose what you want. And for us, it's a value play. You’re getting a ton of content at a low price. That pairs really nicely with a lot of the other services, whether it be YouTube TV that's linear or something like Netflix or some of the services that are about to come out.
TVR: You said you have 35,000 hours are on demand. How much of your usage is on that on-demand side? Some of the new services are taking a more traditional approach with weekly releases of new episodes. What does the on-demand component of your viewership pie look like?
MK: A large majority of our viewing is still on linear. That has a lot to do with the Paradox of Choice, where right now, you go into Netflix, there are so many different options that people will start to browse around for a few minutes, and then give up. There's a ton of power in linear TV. With live sports, with live news and with new content, but even with our service, which has a lot of the content available on demand. There still is this idea that if I love TV, I know I'm going to turn it on and most likely there's going to be something on it that I love. We have a lot of those types of channels, and that's why the engagement on Philo is really high. We're talking like four hours a day.
TVR: You do have the Hallmark Channels of the world after all. Thee’s just a set of people who love Royal Canadian Mounted Police romantic dramas, or Christmas specials. And then there's another set who like whatever Comedy Central has this year. You’re playing to the superfan, right?
MK: Absolutely. We're big believers in the brands on the platform too, whether it's the Hallmark Channel, HGTV. Investigation: Discovery is a juggernaut. We have a lot of those channels that are a super service kind of genre, and that people will just turn it on. It's comfort food.
TVR: You said you've seen some really serious growth in the last year. Where do you see the growth coming in the future, especially with the big new services launching in the next several months.
MK: We're in the midst of our largest growth period in the company's history. In the last two months, we've grown by 30 percent. Since the beginning of this year, we're on a compounded growth rate of 13 percent a month. So, every month we're growing on average about 13 percent. it's pretty sizable,. We’re now into like the second year of operations, and it's exciting to see us pick up steam right now. You're right, there's a lot of big players about to get in this space. When I think of something like Disney+, I think they're going to be wildly successful. They're coming in at a great price point. They know what they're doing. But do I think there's a macro issue around fighting for dollars and an amount of time in a day? That might be a concern but on on the day to day, we don't carry the Disney channels.There's no direct competition or threat.
TVR: They're not pulling back the Marvel shows from Philo, for instance.
MK: That's exactly right. I'd be really surprised if there was any massive sort of share shift or anything like that. Where we are as a company, where I think we have just a ton of room to run. we're doing a good job on the performance marketing side. General awareness of Philo Is still, to use a sports analogy, we’re in the second inning or the first inning. We think we still have a ton of room to run. And what we've seen is that anytime somebody new comes to the market, it just makes it that much easier for people to want to put together their own package. And we bring a lot of the package to the table for for a low price.
TVR: Your company got its start in colleges and still has a significant presence on around 80 campuses. And it’s, somewhat fittingly, a lab for where your future is. What are you doing there/
MK: The backstory of Philo is actually pretty interesting. The company has been around about eight years. And the whole premise of the company is that people love TV, but hate their TV provider. That held true eight years ago, and that still holds true today. The founders thought there was a big opportunity to build a better product. This is before Sling, before Vue. If they'd gone out and tried to get licensing with no platform and no money that wouldn’t have gone very far. And so they tried that and then hit a roadblock. Bu we did find this niche on college campuses, and basically built a mini OTT service that serves the on-campus student populations. And so we're currently at about 80 schools. It's still a platform business that we run today. But the company’s original ambitions were always to launch a service direct to consumer. So we took a lot of what we learned in the college space about the product, about the package, and about a year and a half ago, we launched our direct-to-consumer product. The college platform is still a place to do things, and we’ve got good growth. Lots of things that are exciting are happening right now.
TVR: What’s the next step for Philo?
MK: Right now we feel like we’re in a good spot. We just need to execute. We're coming into this hyper-growth period. And we have continued to room to run. The first year was all about getting to table stakes. We launched Philo just with Roku. Then we needed to get on Fire TV, Apple TV and Android TV. So we took care of that in the first year. It was a similar process on the ad side. The ads don't matter as much when you're starting with zero subscribers when you first launch your product. But now we have a good amount of scale. So in the second year, we really focused on building out all of our digital ad-insertion technology stack. And so that's also experiencing a similar growth trajectory. I think it's we're going to continue to invest. We're a product company. At the end of the day, that's how we’ll spend our time. We’re going to just continue to innovate on the product side and continue to execute on marketing and advertising.
You can hear my conversation with Mike Keyserling of Philo on my Bloom in Tech podcast episode here. I also talk about Apple’s move for 100 million TV+ subscribers and more.
