COMMENTARY

Prospects For Virtual Pay TV Providers: Access Is Up, Viewers Are Another Issue

• by Wayne Friedman , Staff Writer, September 30, 2021

Virtual pay TV providers haven’t replaced traditional pay TV providers yet -- not even close. What’s the long-term prognosis for the business? Meh, maybe.

This isn’t to say individual success stories aren’t being written. According to Rich Greenfield, media analyst of LightShed Ventures, Google’s YouTube TV now has a slight lead over Disney’s Hulu -- just over 4 million.

All good and well. The bottom line is that virtual pay TV providers -- virtual multichannel video program distributors (vMVPDs) -- still haven’t overtaken the industry. It’s been six and a half years since the first real vMVPD service, Dish’s Sling TV, started in February 2015.

The biggest pay TV providers are still Comcast, Cox, DirecTV and Dish Network -- anywhere from 9 million each for Dish TV and DirecTV, and up to 15 million for Charter and 19 million for Comcast.

The virtual pay TV business has been making slow business improvements. But its growth rate -- in terms of adding subscribers -- is slowing. The industry added just 227,000 subs in the second quarter 2021 to total 11.98 million according to MoffettNathanson Research.

At the same time, we see individual streamers distributors gaining speed, especially pure-play streamers like Roku and Amazon Fire TV. Is one business affecting another? Though this is not an apples-to-apples comparison, overlapping services can be an issue for modern TV consumers.

At the same time, we know vMVPDs, such as YouTube TV, can also carry individual VOD streamers, as well as traditional TV networks and local TV stations. Streaming distributors don’t typically handle the latter.

And then there are those still nagging “blackout” situations. Right now, YouTube TV is in a contract squabble with NBCUniversal.

The real question for future home entertainment: Where will consumers want to hang out -- platform-wise? And what’s needed to fill in any gaps?

Do consumers now have easy access to virtually everything they need -- legacy/virtual pay TV providers, streaming distributors and/or individual VOD service through other means?

Yes, on the “access” question. But when it comes to a single TV distribution point? Nope.

For many young TV consumers, this may not be an issue -- in large part because a large and growing percentage aren’t even regular watchers of “TV” in the first place.

So consider other access points in the future -- which only seems to get more complicated.