A LOOK AT WHAT’S NEXT FOR VIEWERS OF ONLINE TV
Sounds familiar: Companies aim to simplify with packages
What’s next for online TV services may be ironically familiar as companies aim to simplify the viewing experience.
If there’s anyone who should know about the future of paying for TV, it’s Hunter Sappington, 25, who tracks about 215 internet video services for his job as a research analyst.
He knows what’s coming (ESPN+ debuted in April, Disney’s streaming service to launch in the fall of 2019) and going (Seeso, RIP November 2017). He knows how popular they are — he says nearly half of the 215 have well under 10,000 subscribers. He has access to just about anything he wants to watch. But he only regularly uses four at home: Netflix, Amazon, anime-site Funimation and Playstation Vue.
“I did grow up in a cable household. Moving out in college, I never picked it back up again,” said Sappington, a researcher for Parks Associates who was in Denver last week for a TV industry event about the online video industry. “A lot of us ‘cord-nevers’ probably experienced cable at some point in their lives and ultimately determined it wasn’t worth it for one reason or another, either financial or because they don’t have the channels I want.”
Sappington doesn’t feel like he’s representative of most 20-somethings but in reality, he’s part of the next trend happening in the online video space when a consumer is given too many choices. They self curate. The trend was a common theme at the Pay TV Show, an industry event for subscription TV services, and it’s shaping the services, the devices and business models.
A growing number of consumers subscribe to multiple streaming services, with those paying for three or more services doubling since 2014, according to Parks research. And people don’t want to
juggle five or 10 apps to watch video on a half dozen devices. So companies from Amazon to Comcast are offering a marketplace of subscribable content outside their regular shows or channels. It’s the idea of one service offering access to all the shows you want to see and charging it on one bill.
It’s a reason why Dish Network launched its AIRTV that makes it easy to access streaming channels plus channels a customer can receive over the air via an antenna. The AIRTV box integrates the disparate sources and puts it in one convenient guide that can be controlled by one voice remote. But from the start, AIRTV had to make a tough decision of whether it should allow other services to compete with Dish’s own Sling TV, which offers live TV channels like ESPN and HGTV starting at $20 a month.
“We decided the benefit of having the apps (from competitors) was worth far more than worrying about the competition,” said Mitch Weinraub, Airtv’s director of product, during a session about innovations. “If a Directv app became available, we had to accept that it will be on the box. … The reason we did it wasn’t about money but giving the customers what they want. It goes a long way to winning the customer.”
Amazon Channels, an ala-carte video subscription service, launched in 2015 with dozens of channels that let people watch different streaming services on one screen with one remote and pay one bill. Today, it has more than 140 channels and according to research firm The Diffusion Group, Amazon Channels accounts for more than half of premium subscribers to streaming services like HBO, and nearly 70 percent for Showtime and Starz. And Apple reportedly is working on a similar marketplace to give consumers a one-stop shop.
“This is not really that innovative to be honest,” said Michael Greeson, TDG’S president. “It is the dominant means for those looking for a-la-carte channels to purchase them. Instead of going to HBO’S website to buy the service, they go to Prime. Amazon gets a slice of the revenue and provides a consistent experience.”
But regardless, Greeson said, an aggregation service appears sorely needed by consumers.
“It’s too complex for the average individual and it takes too much time,” he said. “It’s too much hassle to go into an individual app, search it and close it and go into another app and search it and close it before you find what you want.”
If Apple does jump in, Greeson said it will have a major advantage: no $120 Prime membership fee.
Every year, more new services are launching and often trying to differentiate from the earlier channels like Sling TV, which is among the largest with 2.3 million subscribers. Fubo TV, at $44.99 a month, focuses on sports. Philo TV focuses on entertainment and lifestyle channels — and not sports — starting at $16. And ESPN decided to package all of the video that wasn’t on its regular cable channels to create ESPN+ for $5 a month.
There are also the more familiar services like Hulu Live and Youtube TV, both of which launched their live-tv subscription services last year in Denver. Directv Now has plans that start at $35. But have you heard of Hortus TV, the “Television for Gardeners,” or Dekkoo, which offers “the largest collection of gay entertainment anywhere” for $9.99 a month?
“We’re moving forward to a model where people can pick and choose what they want even if they have to pay more for it. It’s that perceived value,” Sappington said. “People who don’t like sports don’t want to pay the extra $10 for ESPN, ESPN2, ESPNU, ESPN News and ESPN Deportes but that’s how (traditional pay TV) works. New services like Philo say, ‘You don’t have to do that. You can get lifestyle and entertainment channels and we’ll cater to that niche for $16.’ Anything that offers more choice and more personalization in the end is good for the end user. As a consumer, I appreciate that.”
And then there is Sony’s Playstation Vue, which starts at $39.99 a month. The service offers mobile viewing but also has a different experience for those watching over a Playstation 4 device, with features like the ability to watch three live shows simultaneously on one big-screen TV. It’s one of the rare services to let a user subscribe to standalone channels like HBO, Showtime and Cinemax without having a minimum plan. While those channels offer their own streaming channel, going the Vue route means one screen, one remote and one bill.
“It’s a bet we made and we believe in,” said Dwayne Benefield, head of Playstation Vue. “When we launched Vue in 2014, there was a debate about whether is this is going to be a world of apps or aggregation? We had the foresight to see that users don’t want four different subscriptions, four different apps and four different experiences. They want one TV experience where they can search and navigate the entire catalog of live and on-demand (video).”
As consumers curate their online TV services and companies like Amazon oblige and offer a more integrated service to allow them to pick and choose and get one bill, the irony is this may get us back to where we started. Cable companies are at the ready.
“The choice consumers have is pretty massive compared to 10 years ago. They want quality content at a reasonable price,” Gary Schanman, senior vice president of video products at Charter Communications, said during a session at the Pay TV show. “We look at this as an opportunity. … The truth is companies like ourselves have been aggregating content for years. For us to integrate Netflix is pretty natural.”