As the number of subscribers to traditional pay-TV bundles continues to decline, many TV executives continue to tout so-called “skinny bundles” of content as a way to keep their subscription businesses going, while TV viewing increasingly goes over-the-top.
21st Century Fox executive chairman Lachlan Murdoch, speaking at Business Insider’s Ignition conference on Wednesday, said that bundles such as YouTube TV and Hulu Live now have hundreds of thousands of subscribers, although it's still “very early days” for these types of services.
More mature services, like Sling TV, have subscriber figures in the seven figures --although taken together they still pale in comparison to the traditional pay-TV market, which has more than 90 million households paying for cable or satellite services.
For companies like Fox, these new bundles present an opportunity to maintain the
subscription revenue that has driven their businesses since cable TV exploded in the 1980s and 1990s. The catch now is that in a world of choice, intellectual property and original content are more
important than ever before.
“As the traditional cable business is declining, absolutely there are subscriber revenue losses that are being ameliorated by these new bundles,” Murdoch said. “But here’s the key: You have to be on those [streaming] packages, and those packages are only valuable if they are cheaper than the current loaded cable bundle. So to be in that core bundle, you need to have core channels that people want.”
Murdoch suggested that his company’s investment in the Fox broadcast network, Fox News and FX was about ensuring those brands will be “must-haves” for these new skinnier bundles, such as YouTube TV.
Viacom CEO Bob Bakish struck a similar tone at the conference. Going forward, "we have to not only maximize our share of the margins in the traditional business, but also accelerate our participation of next-generation platforms and solutions,” Bakish said. “Consumers have more choices than ever at more price points than ever, and these flagship brands need to be represented across them.”
Bakish said Viacom’s core brands would be represented across traditional pay-TV packages, but needed to be present, even if in a light capacity, in these skinnier streaming packages.
Whether these OTT offerings will fully replace the traditional pay-TV ecosystem remains an open question, but with a slew of OTT bundles targeting specific consumer groups, every TV executive Digital News Daily spoke to at the conference was confident that the opportunity was real.
FuboTV targets sports fans, offering a clean and easy user experience, albeit at a price point that may not save subscribers much money over the traditional bundle. Philo, which Viacom supports, takes the opposite approach by specifically avoiding channels with sports, targeting entertainment and unscripted content fanatics. By reaching specific consumer groups with curated content, the hope is that these OTT bundles can, in the near future, reach a tipping point.
“What has changed in the last four years is that [intellectual property] -- telling great stories, content that people love -- is what matters,” said Discovery Communications CEO David Zaslav.