Virtual Pay TV May Become 'A La Carte' TV

There is more evidence virtual pay TV providers may not be a deal for consumers versus traditional pay TV services. Are so-called “a la carte” consumer decisions taking over?

YouTube TV just raised its price an eye-opening $15 to $65 a month. This was followed by Fubo TV upping its packages $5 to $10. Last December, Hulu + Live TV raised its price from $10 to $54.99 a month.

By way of comparison, the average price for pay TV service in the U.S. declined 9.5% from 2016-2018, from $84 to $76, according to Parks Associates. Still, many pay TV packages can be priced near $100.

If you are looking to cater to cord-cutters/cord-shavers, what is the savings here? The answer may be: not much.

Key in the price rises -- to no one’s surprise -- is the cost to virtual pay TV operators to carry major TV content channels. YouTube TV pointed directly to adding a new ViacomCBS agreement as the reason for its price hikes.



When it launched, YouTube TV’s plan was to ensure it had the big broadcast/cable networks for its service, which tend to pull in higher viewers/users. YouTube TV has more than 2.3 million subscribers -- just a tiny part of the overall pay TV provider business.

At the same time, a number of these digitally-based pay TV services are now seeing eye-opening subscriber declines. What is going on?  In January, Sony’s Playstation Vue shut down. Profit margins are thin for many operators.

In part, single-focused, somewhat more narrowly targeted premium apps continue to do well.

This includes Netflix, Disney+, HBO Max, Apple TV+ (with Peacock and a bigger CBS All Access to come), as well as set-top box/smart TV providers like Roku and Amazon Fire TV, which allows consumers to pick and choose what apps (free and paid) they want to use.

The focus here goes back to decades-long complaints about legacy pay TV providers not giving consumers the ability to pick and choose exactly the channels they want.

The lack of “a la carte” buying of individual networks frustrated consumers.TV industry leaders claimed such a system would end up costing consumers more in the end.

No matter. Seems consumers are now picking and choosing their own $5 to $15 individual networks apps. This also includes tacking on growing devices/interfaces. Roku and Amazon Fire TV each claim around 40 million monthly users.

All that is telling TV business streamers something: Even if we pay the same or a bit more, if you don’t give us exactly what we want, we’ll figure out how to do it ourselves.

2 comments about "Virtual Pay TV May Become 'A La Carte' TV".
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  1. Peter Clifford from RIDE TV, July 7, 2020 at 10:23 a.m.

    The high cost of content is universal.  No matter what platform/service the consumer decides to subscribe to.  By-and-large, good content costs a tremendous amount of money to produce.   

    YouTube TV and other streamers that offer a large amount of content are now competing with the incumbents. They are forced to raise their prices because of deals they have to make with sports nets, broadcast nets and other popular nets to gain subscribers.  Just like every other distribution platform out there. 
    Some content companies are profiting off of content libraries with hit re-run programming that they already own.  It is anybody's guess how long that archived content will sustain the model.  But by-and large, content companies need to continue to spend enormous amounts of money to create compelling content. Therefore, they need to charge for it.  As such, distributors need to pay a premium to gain access to the content.  In order to stay in business, eventually, they have to pass that cost on to the consumer.  Simple math.

    Your list of "narrowly targeted premium apps" is incorrectly categorized.  Disney, Apple TV, Netflix, Amazon and HBO Max can be more accurately described as "Mega Aggregators" who are broadly targeting consumers with content that appeals to as large an audience as possible.  These streamers, that you suggest consumers are choosing for $5 to $15 per month, are facing tremendous churn on a monthly basis and spending billions on marketing to keep potential subscribers "in the funnel."

    Lastly, your comments about the decades-long complaints about legacy pay TV providers not giving consumers the ability to pick and choose exactly the channels they want has nothing to do with the distributors not wanting to provide a-la-carte.  It comes from the  content companies not allowing it.  

    Fun times in the content and subscription business!


  2. Bill Shane from Eastlan Ratings, July 9, 2020 at 4 p.m.

    Not knowing exactly how this works with the streaming companies and the deals they make with the networks, so if what I say is stupid, my apologies.  Do the streamers ever make their deals with the studios directly?  When I was Program Executive in Florida, if we wanted a movie package it would always be peppered with some real dogs.  I remember making a deal with Columbia Pictures for a package with some great titles, but they also included the movie "Ishtar."  I remember tellin gthe sales rep that Columbia should pay us to air it.  He wasn't amused, but neither was I because I had to run it twice and one of those runs had to be in prime time.  Yeah, it ran on Saturday night during a holiday weekend.  

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