1. vMVPDs Are Booming

While traditional MVPD pay TV is more or less falling off the cliff, vMVPDs, YouTube TV and Hulu Live TV in particular, are adding customers at a steady clip. 

As per Leichtman Research, a company whose numbers I actually trust, traditional pay TV providers (cable and satellite) lost around 1.8 million subs in Q3 2023, while vMVPDs added around 1.3 million, leaving pay TV with an overall net loss of 500,000 subs.

This should complicate the “massive wave of cord cutting narrative” some, only it won’t, because the trick is to just not count the vMPVDs as part of the pay TV ecosystem, even though they have the same programming and the dollars flow to the same entities, right down to the carriage and retrans fees.

More than that though, it raises the question of why vMVPDs and what this means for the industry going forward.

Why It Matters

I have often referred to vMVPDs as a “nicotine patch” of sorts for people who want to cut the cord but are afraid they’d be giving up too much.

They are, despite prices more or less doubling over the past five years, a considerable bargain compared to their set-top-box-reliant competitors. If nothing else, the monthly fees for those set top boxes can run close to $50/month, depending on how many boxes you have.

Second, they allow the user to avoid the dreaded “input switch” from set top box to streaming device or smart TV. That alone makes the switch worth it, given the daily hit of dopamine one gets from only having to use one remote control to watch TV.

Finally, there is still much that is not available without a pay TV subscription, from numerous college and pro sporting events to awards shows to the local news.

And while there are workarounds (antennas, streaming options) vMVPDs are just a much easier option and most people are going to choose easy versus figuring out how to install a rooftop (or even window) antenna that may or may not pull in all the stations they’re hoping for.

So there’s that, and then there’s the Disney thing I mentioned last week—should Disney choose to rebrand Hulu Live TV as Disney TV, I suspect they’d see a somewhat massive increase in subscribers, given Disney’s sterling reputation for family-friendliness and ease of use. 

And that’s before we get to Sling TV and Fubo TV, both of which also saw substantial increases in users (117K and 310K, respectively) last quarter.

Overall, the vMVPDs now account for just over 20 percent of all pay TV subscribers, a number that should keep growing over the next three to five years.

That number will depend on how long it takes for the SVOD services to get their respective acts together and launch what we’ve been calling “mini-pay TV bundles.” Max is already close to there. They have news (CNN), sports (Bleacher Report) and a variety of well-defined entertainment sub-brands (HBO, HGTV, Food Network, Discovery) that allow the consumer to feel that they are not missing anything. 

Once the other SVOD services get on board with something similar and local broadcasters set up shop on the FASTs, the need for the vMVPDs will evaporate.

At which point they’ll have to decide what their purpose is. 

Cable MVPDs, who have been on the losing end of the cord cutting battle, have a real advantage in this next stage, as they can bundle broadband together with streaming bundles in a way that makes both consumers and programmers happy.

vMPVDs have no such option, unless, of course, they decide to join forces with mobile carriers who can offer fixed wireless broadband as part of a larger bundle.

Time will tell.

What You Need To Do About It

If you are a vMVPD, the time to start thinking about “what’s next” is now. Get those feelers out to Verizon, AT&T, T-Mobile and smaller wireless companies as well. Start talking to streaming services and start integrating them into your platform now, as it will make things easier in the future.

If you are someone who writes about the TV industry, remember that switching to a vMVPD is not actually cord-cutting—it’s just “cord switching” if you will. Saying this is sort of spitting in the wind—the clickbait potential of “almost two million cut the cord in Q3” is just too strong, but at least I know I made the effort.

2. The Strikes Are Over, Now What?

The Screen Actors Guild has finally come to terms with the various studios and so the Great Hollywood Strike of 2023 is finally over.

As many people have pointed out, Hollywood strikes go hand-in-hand with major technological disruptions (the rise of cable, the launch of the DVR) and so streaming should not be any different.

None of the demands the unions were making were all that unreasonable—mostly they wanted accommodations for the changing economics of the business, something the studios ultimately gave to them because everyone seemed to realize that without the possibility of that pot of gold at the end of the rainbow, attracting top talent to the industry was going to become incrementally harder and that was in no one’s best interest.

The AI piece was trickier in that everyone was trying to account for something whose future capabilities are still largely in the realm of conjecture, so there’s a lot of fearmongering and “what-if”-ing going on.

Meaning that piece will need to be renegotiated at some point down the road when AI’s real capabilities are clear and pretty much upon us.

Why It Matters

There will be a number of trends developing in the post-strike period and since our job is to identify said trends, here goes:

Quality Over Quantity. Remember that South Park bit about how Netflix would greenlight just about anything?

It was funny because it was not all that far from the truth and there’s been a recognition that all those mediocre shows were a net negative for Netflix, and a simultaneous recognition that a single White Lotus can do far more to drive subscriptions than ten reboots of Family Matters.

Not to mention the difficulty of adequately marketing all ten reboots.

So look for the streaming services to focus on a handful of very well done shows that receive ample marketing budgets and PR.

Longer Seasons.  There’s also been a realization that while lack of consistency became an issue for many long-running network series, it is overshadowed by the strong cultural impact these shows had as viewers followed the story arcs of shows like M*A*S*H, The Mary Tyler Moore Show, Friends and The Office for what in some cases amounted to a full decade. And that’s before you get into the large sums of money that 100+ episode series can fetch in syndication. Or the ability of a nine-month season to cut down considerably on churn. So look for streaming services to start experimenting with the classic sitcom again. (The full argument is here.)

Higher Prices. The settlements require that actors and writers make more money. As well they should, but you didn’t really think the streamers, networks and studios were going to pay for that, did you? Nope. Those higher salaries are going to be paid for by consumers in the form of higher subscription prices. Sort of what happened with carriage and retrans fees back in the 90s.

The Role Of AI. AI will enable some minor changes: the mouths of actors who are dubbed into a different language can be made to move as if they are actually speaking that language. Voices of people who are dead or on another movie set can be dubbed into new series or movies. And the scripts for nature documentaries and similarly straightforward shows can likely also be written and voiced by AI. At least for the most part. 

What AI has not been able to do, at least not yet, is provide that spark of genius that scripts written by actual humans can attain. Which is not to say that much of what’s on TV contains any spark of genius or that a script written by AI would not be better than, say, Manimal, but it’s unlikely, at least right now, that anyone is going to go there.

But ask me again in five years.

What You Need To Do About It

If you are a writer, actor or producer, congrats. Your jobs are safe, you will be fairly compensated for your work going forward and you can sleep well knowing you fought the just fight. That said, remember that there will be far fewer of you—that’s one of the downsides of the “quality over quantity” thing, so remember not to rest on your laurels.

If you are one of the studios, streaming services or networks, remember that it is a new world now. Consumers have gotten used to streaming, they’ve gotten used to churning, and you will need to present them with reasons to keep subscribing. That is going to mean a combination of programs they want to watch plus interfaces they want to use. 

Because right now, the number one complaint I hear from people outside the industry is just how hard it is to find things.

Finally, if you’re an advertiser, remember to support all those quality shows, especially if you want more of them.

The ad supported audiences may not be that large just yet, but you’ll be reaching people it’s hard to find elsewhere.

ALSO: Check me out on this panel from Streaming Media Connect “Know Your Audience: How to Use Data to Raise ROI”