COMMENTARY

Virtual Pay TV May Become 'A La Carte' TV

• by Wayne Friedman , Staff Writer, July 6, 2020

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.