Could vMVPD Services Like YouTube TV Threaten Cable TV?

Could vMVPD Services Like YouTube TV Threaten Cable TV?

Can this kind of service stop more customers from going full cord-cutter?

vMVPDs (virtual multichannel video programming distributors), like YouTube TV, Sling TV, and Hulu + Live TV, are a category of services that are seen by some as a happy medium between keeping cable and cutting the cord completely. Users have the opportunity to pay less money than they would be paying to Comcast or Charter, and get most of the channels they want.

The downsides include subscription prices for the services that have been creeping upward, as well as the tendency of those services to sometimes lose channels in carriage disputes.

Nevertheless, a new study sees a huge amount of interest in switching to the vMVPD services.

According to a survey released late last month by Parks Associates, called Growth and Challenges for vMVPDs, nearly half of broadband households in the U.S. plan to switch to vMVPDs in the next year.

“43% of U.S. broadband households with traditional pay TV are likely to switch to a virtual multichannel video programming distributor (vMVPD) in the next 12 months,” the report said. It added that while the services were hurt in the early months of the pandemic by the lack of live sports, “the successful services like Hulu + Live TV and YouTube TV have been able to push the advantages in pricing, content, and platform flexibility to drive growth.”

There are several reasons, per the survey, why customers are making the switch. The most prominent reasons given by those who switched include the high price of cable/satellite service, features that are only available from the online service, specific promotional offers, switching in order to watch a specific channel or show, or because cable had too many channels they didn’t watch.

“Subscriber losses in traditional pay TV continue, while the vMVPD category continues to grow, thanks to consumer price sensitivity and preferences for platform flexibility,” Paul Erickson, Senior Analyst, Parks Associates, said in the release.

“Traditional pay-TV operators have online delivery in their roadmaps, if not already deployed. We expect vMVPDs will continue to grow dramatically and will gradually become the dominant offering in the pay-TV landscape.

“vMVPDs have substantial opportunity if they can avoid the pitfalls that typically drive pay-TV customer dissatisfaction, such as rising prices and inflexible content and platform options. With content prices rising and competition increasing, vMVPDs should remain conscious of consumer price sensitivity while keeping a strict adherence to a consumer-centric experience,” Erickson said.

Leichtman Research Group, in its quarterly report, found that the vMVPD category gained a million subscribers in the third quarter of 2020, bringing the total universe of vMVPD subscribers to about 7.7 million; traditional pay TV companies, in that same period, lost 120,000.

About 700,000 of those additions came from Hulu, although YouTube TV was not included in the totals, since Google did not release specific subscriber numbers.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.