Commentary

More Price Hikes For Digital Pay TV

Consumers love their movies and TV shows. But do they put a “premium” descriptor on material, just like content producers? Now, they might get the message.

Fashionable and new virtual pay TV producers -- DirecTV Now, Sling TV, Playstation Vue and others -- figure consumers are buying in and not looking back. So they are raising prices.

On Tuesday, Sony’s Playstation Vue said it was raising its prices for all its packages. Its most modest packages will now be $44.99 per month, up $5. This followed Monday’s announcement that DirecTV Now’s cheapest package would rise by 14%  to $40 per month. Last Thursday, Sling TV said it was raising the price of its base package by 25% to $25.

The growing network carriage fees virtual pay TV providers have to pay is the main reason for the hikes. For some packages, this comes with higher-priced sports TV content.

TV consumers -- those who fled the $80 to $120 traditional pay TV packages -- to pay $20 to $40 for cheaper digital video packages -- are possibly getting the drift.

The still-young digital video part of the TV industry has a financial question mark looming over its head regarding profitability, says Craig Moffett of MoffettNathanson Research. 

The vMVPDs (virtual multichannel video program distributors) offer a modest selection of channels for their most basic offerings -- 30 to 60 channels, versus the 200 or so of traditional pay TV, all to help keep prices low. But contributing networks know the score. Their score.

Many are losing money -- due to weakening TV advertising revenue. Many may need to maintain, if not raise, their wholesale fees per subscribers. In turn, vMVPDs pass on those costs to new consumers.

Many vMVPDs owners also own full-fledged cable, satellite or telco services; they have been subject to declining subscribers, due to big yearly price hikes.

You don’t need to be a genius to figure out what this means -- especially as TV networks and the media ecosystem overall continue to push the message of “premium content.”

But will consumers continue to buy in? Will the rising volume of TV shows and movies -- running everywhere -- mean cheaper deals to be had?

You can put a premium on their answer.

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