Verizon To Debut Digital Live Linear TV Network Package
- by Wayne Friedman , March 31, 2017
The company has been lining up deals with TV network groups in an effort to start up a service this summer, according to a Bloomberg Technology report.
This would be different from Verizon’s video-on-demand service, go90, that targets young TV-viewer videos -- as well as a separate operation to its fiber based pay TV service, FiOS.
A Verizon service -- as with others -- would aim to be much less expensive than traditional pay TV services that run $80 to $100+ a month. It would follow in the footsteps of AT&T, which launched DirecTV Now, earlier this year. That service -- a “skinny” TV bundle of networks -- starts at $35 for 60 channels.
It would also compete with Dish Network’s Sling TV, one of the first services of this type, which started up two years ago in January 2015. It’s basic package costs $20 a month. Analysts estimates are that Sling TV has around 1 million subscribers.
A number of other services of this type are planned -- one coming from Hulu and Google’s YouTube, called YouTube TV. Analysts say all current over-the-top (OTT) services of this kind total around 2 million U.S. subscribers so far.
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If all of these ventures succeed and a large percentage of U.S. TV homes sign up for "skinny" bundles---say 30% of them----this will herald a major turnabout for the broadcast Tv networks and the cable channels they happen to own as the number of channels received by this 30% of all homes will decline from 200 per household to about 40. Since most or all of the bundles will feature the broadcast networks---via their local affiliated stations--- plus their cable channels---but not many of the other cable program services, the former will see an average rating resurgence of significant proportions and with it more ad dollars as well as whatever they gleen from the subscription fees collected by Verizon, YouTubeTV, etc. No wonder the networks are all in on these projects while independent cable programmers will be badly hurt---unless they can organize their own skinny bundles and get lots of people to sign up. Stay tuned, folks, if this works it could reshape TV---making it more like it used to be--which is not what supporters of unbundling have in mind.
Ed & Wayne: Doesn't it seem these skinny bundle launches are somewhat overdue consolidation drivers for the cable nets; particularly given the business has reached the relatively mature stage? Cable nets have been able to delay changing their business models and mute the ala-carte movement. It could offer some hidden advantages for most players. Cable nets can trim channel portfolios to improve profits, better behavioral viewing metrics might surface (particularly w/telcos) and broadcast and cable channels might get boosts in OOH viewing numbers (per mobile). I'd also guess ad targeting, per local avails and possibly national could assume a more "person" focus. Your thoughts?
James, basically I see this as a very clever move by the broadcast TV networks to invade the digital sphere---with the help of Google, Verizon, etc.---so they can reduce the number of competing channels and stem their rating erosion in the "linear arena" while expanding their audience via digital means---in the latter case by added ad revenues -as I have read is part of the YouTubeTV deal--- and by sharing in the subscriber revenues----if these ventures prevail. It is possible for some of the excluded channels----those not owned or allied with the broadcast TV networks ---to look for other income sources to compensate for their losses in "linear" coverage but I fear that many will go belly up or morph into much smaller forms---audience-wise ---with an attendant reduction in the quality of their content. The most interesting thing to watch ---if the broadcast network's begin to sharply reduce the coverage of rival cable channels will be how these will respond. Will they band together in some way and partner with yet another digital biggie? This is probably what they will try but I doubt that they will get very far with limited national news and sports content capabilities and few of the big time "qulaity" shows that the networks have to offer as well as local news on their station affiliates. A potential bloodbath for many of the smaller , more selectively programmed, cable channels iseems inevitable.
As for the cable systems and satellite distributors, the obvious counter to massive cancellations as people subscribe to the streaming skinny bundles, is to offer the same kinds of bundles---including all of the broadcast networks, their stations and most of their cable channels---but leaving out some of the less appealing ones and replacing them with other channels. The problem is that this approach would greatly dininish the cable systems' profitability so they would be in a quandry. Do they try to survive by forming a consortium and buying up ABC, Fox and/or CBS to forestall the skinny concept? And how will Comcast respond if its own network, NBC, is part of a streaming venture that is costing Comcast millions of subscribers? Or will all TV content be streamed one way or another, anyway, so Comcast and the other cable/satellite companies will simply have to adjust to it.