Posts for 'Skinny Bundles'

Yesterday the U.S. Department of Justice’s Antitrust Division sued to block AT&T’s proposed $108 billion acquisition of Time Warner. The suit breaks with decades of past practice where the DOJ has permitted “vertical mergers” (deals between companies operating in different segments of an industry) accompanied by certain operational limitations (so-called “behavioral remedies”). AT&T has pledged to counter sue, which means the deal’s outcome will now be decided in court.

Though I’m not a lawyer, I’m willing to bet that AT&T is going to prevail for one simple reason: the DOJ’s complaint virtually ignores realities in the TV and video industries. It is only by ignoring these facts that the DOJ is able to lay its foundation for asserting that the AT&T-Time Warner would have too much power, potentially harm competitors and stifle innovation. AT&T’s task is to demonstrate the DOJ’s foundation is faulty, and therefore that its decision to block the deal is unfounded.

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I’m pleased to present the 396th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Many thanks to Brightcove, this week’s podcast sponsor. Brightcove will be presenting insights on server-side ad insertion at our SHIFT Programmatic conference on Nov. 29th.

First up, we explore the potential of Philo, the entertainment-oriented skinny bundle that launched earlier this week. For $16 per month, it’s relatively inexpensive, but neither Colin nor I see it as a game-changer for its backers. Key issues are lack of marquee entertainment networks, completion from other skinny bundles and a glut of high-quality entertainment programming from big SVOD providers.

We then dig into Roku, which reported its first quarterly results as a public company last week. We’re both impressed with how Roku is transitioning from a pure OEM device maker to a licensing and media company focused on online video advertising. By growing its installed base of Roku owners, which in turn supports its ad business, Roku is in the early stages of building a nice flywheel. We discuss both the potential of its model and possible risks.

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Philo has officially launched as a $16 per month entertainment-only skinny bundle targeted to viewers who don’t care about sports. The company has also raised $25 million from Discovery, Viacom, Scripps, A+E Networks and AMC, which are represented among the 37 TV networks included in Philo’s base tier. Another 9 TV networks are available for an additional $4 per month.

Philo’s primary value proposition is that it frees non-sports fans from paying the exorbitant costs of sports programming that are embedded in the typical monthly pay-TV bill. A while back I estimated that at least $2 billion per year flows from non-sports fans to sports-oriented TV networks as an annual subsidy for networks that are rarely, if ever viewed. These billions in turn fund massive player salaries and support team valuations. The wastefulness of tens of millions of non-sports fans paying for programming they don’t care about is the single most inefficient aspect of the TV industry’s current structure.

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I’m pleased to present the 394th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Pay-TV operators are likely to have lost around a million video subscribers in Q3, while skinny bundles (or virtual MVPDs as Colin likes to call them) may have gained around 900K. In this week’s podcast Colin and I talk about these dynamics and what kinds of consumer behaviors are driving these changes.

For the skinny bundles, a big part of the growth is AT&T’s deep discounting of DirecTV Now to support its wireless service. Among others, YouTube TV, with its widespread broadcast coverage and major World Series promotion, is also poised to grow strongly.

But how much of skinny bundles’ gain is coming at pay-TV’s loss is still murky. No doubt some people are swapping, but I question how much they’re actually saving per month, and whether churn will ultimately be high as they realize certain networks aren’t included. Conversely, Colin sees these as “good enough” solutions when combined with SVOD services.

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Have you watched any of the first two games of the World Series? If you have, then you’ll undoubtedly agree that YouTube TV, the fledgling skinny bundle, is owning the games so far. Their branding is everywhere - behind home plate, on dugout walls and rails, on the outfield wall, on the end-of-inning scoreboard, on Fox’s “presented by” branding graphic, etc.

And all of that is on top of a 2-minute ad that played immediately prior to the first pitch in game 1, which cleverly started and ended with a live feed of the pre-game action on a mock living room TV (oddly, that 2 minute ad isn’t available in YouTube TV’s own YouTube channel). However a separate 30-second ad YouTube TV has also been running is (see below).

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I’m pleased to present the 390th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

First up this week, we discuss the impact of the “Star Trek: Discovery” launch on CBS All Access. CBS has said that All Access daily subscriber growth is up 200% over last year since the show’s launch. As Colin notes though, it’s hard to draw conclusions yet about how sustainable the additions will be or whether churn will spike. More originals are clearly needed to broaden the service’s appeal.

We then turn to the surprising news this week that YouTube TV will be the presenting sponsor of the 2017 World Series. Colin and I agree it’s really a sign of the times when a skinny bundle has stepped up this way. However, since Fox, the network broadcasting the games, isn’t even available yet on YouTube TV in half the top 50 U.S. markets, the sponsorship carries risks. Colin also notes that given YouTube TV’s programming costs, it is likely losing money for each new subscriber.

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Can an entertainment-centric skinny bundle succeed? That question will be answered soon when a new service including TV networks from Discovery, Viacom, AMC, A+E and Scripps launches, according to a recent WSJ report. The service will be called “Philo” which is the same name as the technology provider that will power it.

Skinny bundles have received a huge amount of attention over the past couple of years as a lower cost approach the pay-TV industry is using to retain would-be cord-cutters. However, skinny bundles have faced the vexing question of whether to include expensive sports networks in their offers, which in turn pressure already minuscule profit margins.

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The competitive dynamics among skinny bundles are still developing, but one thing is becoming increasingly clear: including a full array of broadcast TV channels in all of the biggest U.S. markets, and even many of the smaller ones, will be table stakes. It seems as if a week doesn’t pass these days without one of the five major skinny bundles announcing a new carriage deal for certain broadcast channels in a variety of local markets.

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I’m pleased to present the 384th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

On today’s podcast, Colin and I first discuss Q2 ’17 pay-TV video subscriber results. Skinny bundles played a big part in offsetting accelerating losses in traditional multichannel services. Will this continue and if so what are the implications?

We then dig into the DVD market’s decline which was further accelerated this week when Amazon decided to close down its LOVEFiLM DVD-by-mail business in several European countries. Colin notes that Netflix’s DVD business has had a huge drop-off also and he speculates whether it too might get cut loose. On the bright side, Redbox re-upped its deal with Lionsgate, showing that DVDs still have a bit of life left.

Finally, Apple was back in the news this week, reportedly allocating $1 billion for original TV shows. We speculate on whether this will be successful and what challenges Apple will face.

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I’m pleased to present the 381st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

This week we discuss both Comcast’s and AT&T’s Q2 ’17 video subscriber results, which were dramatically different, and what we see as the implications.

First, Comcast, lost 34K residential video subs in Q2 ’17, as compared with losing just 4K in Q2 ’16.  Colin and I differ in our interpretation, with him more concerned that Comcast’s streak with X1 has likely run its course. I’m more sanguine because as I look more broadly, over the past 4 quarters, Comcast has managed to turn in exceptional performance in the face of massive cord-cutting headwinds.

By contrast, AT&T’s core video businesses - Uverse and DirecTV - have been hemorrhaging subscribers over the past year, and Q2 highlights how deeply discounted and bundled DirecTV Now is the only bright spot in video for AT&T.  But as I explain, the company’s willingness to all but give away its skinny bundle to preserve its wireless business has potentially profound long-term consequences for the entire pay-TV industry, with Amazon increasingly well-positioned to be a big winner.

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With AT&T reporting its Q2 ’17 results yesterday, the pivotal role that the company’s DirecTV Now skinny bundle is playing in sustaining its wireless business is becoming increasingly clear. It has never been any great secret that DirecTV Now, which now has approximately 500K subscribers, was meant to be bundled with AT&T’s wireless service, but the speed with which it is already contributing to the wireless business is quite noteworthy.

In supporting slides and on the earnings call, AT&T CFO John Stephens repeatedly called out the role DTV generally and DTV Now specifically are playing, particularly in reducing post-paid wireless churn (the type of wireless service most readers of this post have). At .79%, Q2 marked the lowest-ever quarter of post-paid churn.  More broadly, post-paid churn is down 25 basis points since the close of DirecTV deal.

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With the launch of numerous skinny bundles, direct-to-consumer OTT services and innovative new packages from incumbent pay-TV operators, it’s more confusing than ever for viewers to decide which service(s) are right for them and how much they should pay. For skinny bundles in particular, the confusion is compounded by the fact there’s little rhyme or reason to which TV networks are included and which aren’t, leading to what I’ve called the “Swiss cheese” problem of too many holes in their lineups that consequently diminish their value.

To address this complexity, startup Suppose TV has launched a free online tool that allows users to specify their geographic area and which TV networks are most important to them with further filters like DVR availability and device/multi-stream compatibility. Suppose’s algorithm considers these inputs and then provides unbiased recommendations on the optimal services, starting with the “Best Fit” service.

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I’m pleased to present the 372nd edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

This week we discuss 4 stories that caught our attention in recent days. First, Viacom’s plan to anchor an entertainment-only skinny bundle without sports or news networks. Colin and I are intrigued, but for a variety of reasons are skeptical Viacom is the right company to lead this.

Next we turn to Facebook, which has made no secret of its interest in pursuing longer-form video. This week brought news of its initial partnerships and potential business models.

We then discuss Amazon Channels expansion into the UK and Germany this week, building on the US model for Prime users to easily subscribe to various SVOD services. Both of us have been very bullish on Channels for a while and see lots of potential for it in other geographies.

Finally we dig into Snapchat Shows, the fast-growing social network’s plan to enlist multiple media companies to make vertical videos. Variety did a really good roundup of all the activity earlier this week, which suggests substantial progress.

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Although there are already 5 major skinny bundles in the market - DirecTV Now, Hulu With Live TV, PlayStation Vue, Sling TV and YouTube TV - it seems all but inevitable that a 6th will emerge, from Amazon, which could be the most disruptive one yet. While I continue to be skeptical about how big the market for skinny bundles currently is, Amazon has a number of unique attributes that could both enlarge the potential audience and change the current competitive dynamics.

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I’ve been a skeptic of skinny bundles, partially because of the huge holes in their channel lineups (what I’ve dubbed the “Swiss cheese” problem) which I believe narrows their appeal. The most glaring hole has been the absence of all the broadcast TV networks except in a handful of the biggest metropolitan areas. Not having all the broadcast networks is a serious drawback because even in the fragmented cable era, they still draw the biggest audiences outside of sports.

But there’s reason to be cautiously optimistic that this problem may soon be solved. Three of the four big broadcast networks have announced agreements with their affiliate boards which essentially allow the networks to negotiate carriage in skinny bundles on their behalf. NBC was the first to announce its deal, on April 13th. That was followed by Disney ABC on April 24th. And then yesterday, CBS announced its own deal. While FOX hasn’t announced a deal, it has added more affiliates to DirecTV Now, which is a positive sign of progress.

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I’m pleased to present the 369th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

First, we’d like to thank this week’s podcast sponsor Brightcove,  which has their annual PLAY conference coming up in Boston the week of May 22nd. It’s a great show with lots of valuable sessions. I’ll be interviewing Stacey Shepatin, EVP, Director of National Video Investments at Trillia / Hill Holliday in a spotlight session focusing on the changing world of premium video ad buying. Learn more here and note, the first 50 visitors receive a Brightcove PLAY t-shirt!

Earlier this week, Hulu With Live TV launched in beta, a year after initial reports about it surfaced. On today’s podcast we discuss some of the pros and cons of Hulu With Live TV and how it compares in the ultra-crowded skinny bundle market. Colin was also able to take Hulu With Live TV for a quick spin and shares his initial impressions of the service, particularly how it stacks up against DirecTV Now, which he’s been using for a while.

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As expected, Hulu announced its skinny bundle offering today at its NewFront/Upfront presentation. Dubbed “Hulu With Live TV,” and priced at $39.99 per month, the service includes 50+ live and on-demand channels, 50 hours of DVR recording, 2 concurrent streams and 6 profiles.  

Hulu With Live TV is the latest skinny bundle to come to market, joining Sling TV, DirecTV Now, YouTube TV, PlayStation Vue and others rumored still to come from Comcast, Verizon, etc. All of these skinny bundles are vying for a slice of the approximately 15-20 million broadband-only homes in the U.S. (and growing). And though they won’t say it, they’re also looking to draw some of the approximately 95 million existing pay-TV subscribers who are questioning the value of their expensive multichannel bundle as their viewership moves to SVOD services like Netflix, Amazon and others.

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As of year-end 2016, 22% of the 100 million U.S. homes that subscribe to broadband did not also subscribe to a pay-TV service. That’s up from 9% of the 85 million U.S. homes that subscribed to broadband but did not also subscribe to a pay-TV service in 2011. Over the course of 2016 alone, the rate of broadband homes subscribing to pay-TV declined from 82% to 78%, resulting in 22 million broadband homes without pay-TV at the end of last year, compared with 8 million in 2011.

The data comes from a new report from The Diffusion Group, “Life Without Legacy Pay-TV: A Profile of U.S. Cord Cutters and Cord Nevers” that has just been published.

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Here’s a Monday morning brain teaser to consider: is there any rhyme or reason for which TV networks are being included in skinny bundles like Sling TV, DirecTV Now, YouTube TV and soon Hulu? If there is, it’s hard to discern what it is. In fact, the composition of skinny bundles is getting more puzzling all the time.

For instance, last Friday, Hulu announced that it had reached a distribution deal with A+E Networks for its forthcoming skinny bundle. The deal followed previously announced ones with Hulu’s corporate parents Fox, Disney and Turner, plus CBS. But just a couple weeks ago, when YouTube TV was announced, it didn’t include A+E Networks (nor Turner, Viacom, Discovery, AMC or Scripps), though it did include CBS, Disney, Fox and NBCU.

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I’m pleased to present the 360th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Earlier this week, YouTube took the wraps off its skinny bundle, YouTube TV. In today’s podcast, Colin and I explore the pros and cons of YouTube TV and also revisit our debate over skinny bundles’ value proposition. We’re both somewhat skeptical about YouTube TV, given the sheer number of popular cable TV networks missing from its lineup. But with YouTube’s massive user base and promotional opportunity, we both believe YouTube TV will attract an audience.

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