Analyst relieved T-Mobile is pulling the plug on TVision
After a series of fits and starts and stumbles, T-Mobile is finally giving up on its own pay-TV service. And it's about time, according to a top industry analyst.
"The move doesn't come as a surprise, as we've long been skeptical of the rationale for MNOs to offer an in-house vMVPD [virtual multichannel video programming distributor] product, rather than simply partnering with an existing provider," Vijay Jayant, analyst with Evercore ISI, explained in a research note. "While we would have preferred that TMUS not pursue this route in the first place, we see it as an incremental positive that the company is no longer dedicating incremental resources to an in-house video offering."
The analyst's summation came in the wake of T-Mobile's decision to shut down its two relatively new OTT-TV packages – TVision Live and TVision Vibe – on April 29, and to instead move ahead with newly minted partnerships with Google's YouTube TV and Philo.
Jayant points out that YouTube TV, now billed by T-Mobile as its "premium" live TV offering, effectively replaces the TVision Live and Live TV Zone products. Philo, a sports-free, skinny bundle pay-TV streaming service, is now the substitute for T-Mobile's TVision Vibe package.
T-Mobile's decision to shut down the service follows multiple attempts to operate its own pay-TV service. Its $325 million acquisition of Denver-based Layer3 TV got T-Mobile into the pay-TV business, but T-Mobile eventually shut down that service and took a big write-down. T-Mobile could be in the midst of another write-down as it winds down its TVision packages, which included some programming and distribution rights obtained from the now-defunct Sony PlayStation Vue service, less than six months after they were made available to T-Mobile's prepaid mobile subscriber base.
The voluntary Chapter 11 bankruptcy filing by MobiTV, one of T-Mobile's key pay-TV tech partners, certainly played a major role in T-Mobile's decision. But it's also abundantly clear that T-Mobile has finally come to grips with the fact that the pay-TV business is fraught with challenges and that it makes more sense to let someone else deal with the headaches of managing and maintaining services that are trying to survive, let alone thrive, in a pay-TV market that's in decline.
T-Mobile will, of course, give up revenues by drawing down its own pay-TV service, but it will still benefit from the likely revenue sharing deals it's getting from its new arrangements with YouTube TV and Philo. And, with the pay-TV piece ceded to vMVPDs, T-Mobile no longer has to focus on negotiating and renegotiating tricky programming carriage deals.
T-Mobile also realized that the vMVPD market – already home to its new OTT partners along with Sling TV, Hulu, AT&T TV, FuboTV and Vidgo – is fragmented and crowded, making it almost impossible to differentiate and stand apart despite efforts to build bundles featuring its own mobile and emerging 5G-powered home broadband services.
Will other MobiTV partners follow suit?
T-Mobile's decision might also give pause to other MobiTV partners that are weighing their options as the vendor wends through the bankruptcy process. While some still might consider going with another tech partner to fill the void if MobiTV doesn't come through it in one piece or find a willing buyer to take its platform forward, others are no doubt thinking that teaming with a vMVPD rather than pursuing their own pay-TV streaming service is the prudent bet.
Meanwhile, others are playing both sides and still figuring out their role in video as the pay-TV market evolves. WideOpenWest, a midsized competitive cable operator, has launched a new IP-based pay-TV service called WOW!tv+, but hardly promotes it. WOW, which expects to lose more than half its pay-TV sub base in the coming years amid a "broadband-first" strategy, is instead emphasizing marketing partnerships with a handful of vMVPDs.
Additionally, others are stepping up with ideas to help broadband-focused operators navigate the pay-TV game. A prime example is MyBundle.TV, a startup that has developed a consumer recommendation tool for streaming services along with a streaming marketplace that's already in use by WOW and several other US cable operators and telcos.
- T-Mobile to shut down own 'TVision' services, team with YouTube TV and Philo
- MyBundle.TV helps 'broadband-first' players stay in video game
- US pay-TV universe shrank by 857K subs in Q4
- Minerva, Shift 2 Stream also pitch MobiTV backups
— Jeff Baumgartner, Senior Editor, Light Reading