PlayStation Vue. Sling TV. Hulu. Amazon. DirecTV. Google. Maybe even an entry from Apple. All are potential players in the virtual MVPD (V-MVPD) market, a market that at least one researcher believes could top 15 million U.S. subscribers by 2020, possibly going higher as technology and consumer experiences improve.
Increased competition between Comcast and a bigger, more powerful Charter Communications also could accelerate subscriber losses from traditional pay-TV providers, said financial company UBS in a research report, that said satellite and telco pay-TV offerings were likely to take the biggest hit.
Cable networks – especially those in lower tiers – are likely to be collateral damage as V-MVPDs look to offer lower-cost bundle made up of only the channels most in demand.
Dish Network’s Cloud TV play, Sling TV, is on track to sign up 1 million subscribers by the end of the year and PS Vue, after expanding to a national distribution base earlier this year, also is seeing accelerated uptake.
UBS compared the nascent V-MVPD offering to the early days of satellite, a product that took more than a decade to see its technology fully mature and become mainstream with consumers.
“Over time, we expect V-MVPDs to be able to innovate faster than traditional distributors,” the UBS report opined. “This is not unlike DBS service, which began as an inferior product but eventually took the lead from cable in terms of new product development. Ultimately, while we expect V-MVPDs to start out attacking from below, we see them moving up market over time as any kinks in Internet distribution are worked through.”
The UBS report was based on a survey to 2,000 consumers. More than a third (37%) said they would be open to using a service from a V-MVPD provider. For households that already had cut the cord, that number soared to 76%. More than half (56%) of Netflix homes said they would consider using a V-MVPD. Most potential customers for a V-MVPD service likely would be younger urban residents, UBS said.
UBS said it expects pay-TV subscriber losses to reach 6% by 2020, compared to just 2% in 2016.
UBS gave a tip of the hat to Netflix and YouTube, companies, it said, that had been “disrupting the TV ecosystem for a decade.”
But, it expects Cloud TV services to “more dramatically upend business models by offering the same content at a lower price while transforming the user experience.”
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