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  • Kirby Grines

Another one bites the dust

Sony shuttering Playstation Vue. What's the future for vMVPDs?

Citing high content costs and the difficulty of establishing network deals, Sony has become the latest streaming wars casualty, announcing last week that it’s shuttering Playstation Vue on January 30, 2020, making it the first major vMVPD to shut down operations.


Although Sony has never disclosed Playstation Vue subscriber counts, eMarketer estimates that the streaming service counted 800,000 subs.


In general, virtual MVPD growth has plateaued as these services raised their prices, which was obviously bound to happen as “skinny bundles” became “huskier”. AT&T’s AT&T TV Now has been hemorrhaging subscribers for four straight quarters, losing more than 700,000 streaming TV customers over the past year.


On the flipside, Youtube TV and Hulu + Live TV have gained momentum and are both backed with a strong advertising component that they’ve parlayed into subscriber gains.


Kagan research analyst Seth Shafer said, “Advertisers are eager to tap into the small slice of video ad inventory that operators get as part of most carriage agreements," Shafer explained. "Sony largely lacked that same component, so it may have been more challenging for the company to monetize its video ad inventory through Vue.”

It can also be argued that naming a subscription TV product after its video game console wasn’t the best choice, as most people associate “Playstation” with video games and rightfully so. I’ve been in plenty of conversations with non-industry friends and often I’ll hear something like “But I don’t have a Playstation”, not realizing the service was available on Roku, Fire TV, Apple TV, and mobile devices. Perhaps “Sony Vue” would have fared better?


Following Sony’s announcement, Cowen analyst Gregory Williams said that we can expect more closures and/or consolidation in the vMVPD business.


In a note to investors, he wrote, “Despite the cord cutting acceleration, vMVPDs have seen a significant net add deceleration, struggling to compete in the crowded OTT market against each other and the more than 300 direct-to-consumer apps.” Adding, “Our work suggests the slowdown is driven largely by price as vMVPD’s are sub-scale and playing in a generally irrational and unsustainable market. To that point, with the continued rise in programming costs, vMVPD economics continue to get tougher.”


On Friday I caught up with Shane Cannon, CEO of live streaming TV service, Vidgo, who believes vMVPDs will gain customers leaving cable and satellite for cheaper alternatives.


“If vMVPD’s can control their costs there’s no reason they can’t all enjoy success,” Shane commented. “Viewing habits continue to shift towards streaming as consumers look to save money and streaming becomes the primary way consumers consume video content. With the introduction of new services like Disney Plus this trend will likely accelerate.”


He added, “Simply put, there is no reason that every major streaming service won’t succeed” and let’s add with emphasis “IF they control their costs.''


Playstation Vue was a good product, so it’s unfortunate to see it fall victim to the streaming wars. The takeaway should be that four elements are critical to success; content, costs, UX, and marketing.

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