News, Analysis and Informed Opinions from the Industry Experts.
Pay-TV Lite - Coming to a Screen Near You
After many rumours, YouTube TV launched at the beginning of 2017, making its first foray into Pay-TV Lite, the relatively new but already competitive market distorting the lines between traditional pay-TV bundles and online video services. This move comes as a breakaway from the ad-funded content YouTube built its “1 billion hours viewed per day” reputation upon; and they are not the only ones diversifying in this way with MSOs (Multiple Service Operators) already staking a claim and a multitude of others coming down the pipe.
With SVoD pushing down consumer price expectations for entertainment, Pay-TV operators have been struggling to retain their traditional high value customer bases, indicated by the collective loss of over 1 million subscribers by US operators in 2016.
US households now currently spend $88 per month on average for pay-TV services, close to 6 times higher than homes spend on SVoD (a gap which is closing, as multiple SVoD service take up rises – currently standing at 1.6 per subscribing household). Pay-TV Lite meets this delta in the middle, with typical monthly fees of $35.
Dish Network was the first of the Pay-TV giants to push the button on Lite services, launching Sling TV in Q115 accumulating an estimated 1.2 million subscribers since. DirecTV Now launched in December 2016, supported by AT&T’s broadband network and zero-rated on its mobile network, gaining 200,000 subscribers in its first month.
As it may seem a natural progression for MSOs, online video services are digressing to offer this too.
- PlayStation’s Vue service already has close to 1 million subscribers
- Hulu which had accumulated 14.6 million subscribers for its SVoD service by the end of 2016, is moving to linear, most recently signing to offer channels from A&E networks on top of deals with CBS, Disney and Turner Networks.
- Amazon Channels offers a virtual channel aggregation platform already includes HBO, Showtime and Starz. Using the proposition to further build retention and revenue from its Prime membership base. Amazon has also entered the bidding war for NFL streaming rights, currently held by Twitter.With Netflix continuing to dominate the SVoD market (48% share in the US), and competition unable to maintain pace on a like-for-like proposition, Lite differentiates and critically provides additional revenue streams. But this isn’t where the competition ends…
The social media revolution has created a breeding ground for new content creators which many Hollywood studios are increasingly partnering with to tap into this following; with Facebook having access to almost a third of the world’s population, this comes as little surprise. Both Twitter and Facebook have been acquiring live rights and created video specific apps in order to create a base in the live video ecosystem. A culmination of these factors could see both parties release their own Lite proposition. No other online service has this power of reach and engagement, so it would be crazy to not tap into it.
So what next? Comcast is gearing up to launch its Lite service nationwide, Hulu continues negotiations for further channels, rights bidders now include social media platforms, so the cogs are all in place for further disruption.
Oh, and just one more. There’s just Apple left now to react; securing rights to Carpool Karaoke made famous by Britain’s favourite export James Corden and recently commissioning its first Original Series. Surely its intentions are clear…
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.