March 3, 2016

National Streaming TV

Earlier this week, AT&T announced it would soon roll out three different flavors of streaming TV apps. All three (live TV, VOD, and preview) will be available to anyone in the U.S., regardless of whether they’re currently an AT&T customer. This move puts AT&T in direct competition with Dish and its Sling product and in likely competition with Comcast Stream and Verizon Go90.

Are these standalone streaming apps the wave of the future or are they just ‘blips’ as the TV industry figures out where the future is headed?

These ‘blips’ will find a limited audience, at least until the industry discovers the right solution for those that do not want a full 800+ channel bundle.

As with Sling, low-priced Internet-only bundles are ideal for users who want occasional access to TV, news, and sports. For everyone else, adding on all the extras (kids programming, regional sports, HBO, etc.) brings the price within a few dollars of the MVPD’s lowest-priced traditional bundle, only with far fewer options overall.

Bundles Aren’t Bad For You
As discussed in prior essays, bundles are not the cauldrons of evil the tech blogs make them out to be. In fact, they generally serve to keep the price of niche stations down. To wit: the price of the bundle is generally determined by the price of the most popular network in the bundle. Thus, imagine that the mythical UBC Corporation’s most popular channel is UBC, and the price for UBC is $20/month, UBC might bundle its five other (niche) channels together with UBC for just $23/month. That’s because UBC really just wants eyeball for those five niche channels—the more eyeballs, the higher the ratings, the more they can charge for the ads. Unbundle UBC and the price for those niche channels on their own might be $3 or $4 a piece. So if you’re a fan of one of them, you’re not really saving any money. If you’re a fan of two or more, the whole deal’s actually gotten more expensive.

Defending Their Turf
Another reason TDG is not optimistic regarding nationally available Internet TV packages is that whoever is providing you with broadband can easily ensure that their own streaming TV package is the best deal. Want standalone Internet and someone else’s TV service? Internet alone costs $100/month. Want Internet plus our streaming TV package? Well, you can get it for $90/month.

Given that these services all promise to be fairly similar (the networks aren’t going to favor one MVPD over another in these deals), the choice is really a no-brainer: you go for the least expensive option.

TV Everywhere Is Coming
The final reason we’re less than overwhelmed by the prospects for standalone streaming TV is that TV Everywhere (TVE) is finally becoming a reality. With the introduction of Nielsen’s TAM (Total Audience Measurement), all OTT views will now be counted towards a show’s overall ratings and the networks will abandon the restrictions they currently have on TVE viewing.

Once that happens, the use of TVE will accelerate, and MVPDs can offer a low-priced Internet-only package to their current broadband customers that is far more attractive than the one they’ve negotiated for their national streaming TV service. Here again, double- or triple-play pricing will serve to sweeten the deal. That’s why we predict these standalone national service will not fare as well as services aimed solely at the MVPDs own broadband customers and will eventually fade away, destined to be a memory of the age of uncertainty.

Stick with TDG and stay ahead of the curve.

Alan Wolk is one of the industry’s most influential thought leaders and futurists. He writes frequently on advertising models, OTT and social TV.

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