1. More MVPDs Jump On The vMVPD Bandwagon
Frontier, the Connecticut-based MVPD that recently added a bunch of orphaned FIOS subs and WOW!, the Denver based cable company with an exclamation point in its name, both announced that they were adding vMVPD options for their broadcand customers. Frontier now has a deal with Philo, while WOW will start by offering its Charleston, SC broadband customers a choice of Sling, YouTube TV, fuboTV and Philo.
Why It Matters
This is one of those shifts lots of us are surprised didn’t take place much sooner. As in I remember having a conversation about the obvious wisdom of this with Cheddar founder Jon Steinberg at the Pay TV Show (now Stream TV Show) back in 2018.
It’s obvious because building and maintaining a pay TV product is expensive, time consuming and frequently quixotic for smaller MVPDs. (And Frontier and WOW aren’t particularly small either—they rank among the 15 largest U.S. MVPDs.)
For a start at understanding how difficult it is, let’s look at interface design.
Those grid-like interfaces that passed muster in the 80s and 90s look incredibly dated today. And just add to that whole “paying Nordstrom prices for Kmart service” feeling customers have about MVPDs whose pay TV services appear to be stuck back in the 1990s.
Then there are the carriage and retrans fees.
Dish’s Charlie Ergen has enough subscribers to play hardball with the various networks. But smaller MVPDs don’t—they need NBC more than NBC needs them— and so they wind up paying top dollar for programming.
Then there’s the economics of it all.
Offering pay TV and creating “triple play” packages was once a great way to create stickiness and keep customers from straying.
It worked back in the days when you could safely assume that most people wanted pay TV and had to be nudged into taking broadband.
But that’s now reversed and MVPDs make the bulk of their profits from broadband, which pretty much everybody wants, rather than pay TV, which increasingly fewer people do.
So why not cut deals with various vMVPDs, companies that have the resources to both develop compelling cutting edge interfaces and play hardball with the networks in order to keep carriage fees in check.
Seems so very obvious, given that the MVPDs can also use the fact that the customer is getting their TV via broadband now to upsell them on a more expensive broadband subscription.
All while keeping everything on a single monthly bill.
What You Need To Do About It
If you’re a small MVPD, you know what to do—look into offering your subscribers a vMVPD subscription to go with their broadband. There’s even a company called MobiTV that will build a customized vMVPD service for you if you don’t want to go with one of the existing players.
We get that you may feel you can’t make the switch unilaterally—too many older customers still want set top boxes—but if you sell the vMPVD service correctly and provide a solid level of support during the transition, the switch may be easier than you think, and your audiences more willing to accept it.
If you’re a vMVPD, these deals should be pretty easy for you too—you’re basically just adding the MVPD to your sales team and they’re promoting your service as a net positive. So maybe step up your efforts to win them over.
If you’re a set top box manufacturer—looks like it’s time to find an alternate revenue stream.
2. Discovery-Flix Is Coming Soon
In this week’s earnings call, Discovery CEO Dave Zaslav confirmed that the network was planning to launch its own Flix soon and was, like Comcast, Disney and VCBS, trying to figure out how to do so in a way that did not alienate its MVPD partners.
Why It Matters
While many pundits talk about how sports–regional sports networks (RSNs) in particular—are the key factor keeping people tied to the traditional pay TV bundle, I’ve always suspected that non-fiction programming was as big a factor, if not actually bigger.
People love their HGTV and it’s the one thing the Flixes haven’t been able to replicate yet, at least not successfully. (Witness Netflix’s Marie Kondo fiasco.)
Go into any location that used to have the news on TV—a car dealership, a doctor’s office, your local pizza place—and they’re now showing the Property Brothers.
People love that kind of non-fiction reality programming, as it’s sort of an antidote to the high profile, high engagement programming the Flixes keep serving up.
The shows are even shot in a way that rewards partial attention—after every commercial break there’s a recap of what we just saw before the break. In case you had the food processor on or were explaining a math problem to one of the kids or something.
The other good news for Discovery is that its programs are eminently bingeable, precisely because we’ve come to know and love their formats and they don’t quickly become overwhelming.
But that’s not even the half of why it matters.
Once Discovery-Flix launches, users will have even less reason to stick with traditional pay TV, especially when pretty much anything they want to watch will be available on a Flix.
Yes, all those clicks required to switch from Flix to Flix can be a bit of a hassle for viewers, but they’re still not as much of a hassle as paying close to $100/month for programming you rarely watch.
Don’t be surprised to see the introduction of personalized linear-like channels either, something akin to Spotify’s Daily Mixes. They’re easy enough to do from a tech perspective, they help improve ad targeting and they make the “I have the TV on as background noise” lean back experience that much better.
Which will further alleviate the demand for all those 150 channel Super Platinum Plus bundles.
What You Need To Do About It
If you’re Discovery, keep working with the MVPDs—the smarter ones have more or less figured out that the world is changing and that they need to change along with it. They may indeed lean more heavily on you, as, per my thoughts above, they realize that you’re all that’s left between them and the abyss. That said, they all sell broadband, and it is broadband that’s going to allow viewers to watch Discovery-Flix, so there’s a win for both sides in that.
If you’re an MVPD, read the writing on the wall—you’re not going to be able to keep people on the old school pay TV plans, but a combination of Super Skinny bundles + bundled Flixes (e.g., The Great Rebundling) + increased fees from faster broadband plans should help you to replace most of that revenue and keep your subscribers in place.
If you’re a consumer, well, enjoy it while it lasts. Prices will come down and the amount of shows you’ll have access to will go up.
For a while.
Then TPTB will figure out how to raise prices and restrict access because they need to make more money. At which point you may well be so overwhelmed by all those choices, you no longer care.