The National Cable Television Cooperative Inc. (NCTC) announced a deal with Sony PlayStation's Vue OTT streaming service at The Independent Show yesterday. The announcement follows other agreements from the NCTC at the event, aimed at smaller, independent pay-TV and broadband providers and produced by the NCTC and the American Cable Association (ACA) . (See New Arris Boxes Bring OTT to Tier 2 Market and Apple's SSO Picked Up by Indy Operators.)
Negotiating carriage agreements with cable and broadcast networks is one of the most contentious and difficult aspects of running a pay-TV business. If you are a smaller operator with a rural footprint, it is that much harder. That's where the NCTC can help: for years it has been negotiating on behalf of its 850 operator members for pay-TV content and equipment.
But as consumers look increasingly at cutting the cord, and switching to skinny bundles, these operators face another challenge. Only a handful of operators have the resources to create entirely new OTT streaming platforms and shift their technology stack. And then, negotiating pricing for carriage with all the various content providers at a rate that makes the skinny bundle viable is yet another challenge.
To address this, the NCTC has taken its traditional role aggregating linear channels a step further. It has signed deals with two OTT streaming providers in the past week. First, with FuboTV -- a skinny bundle provider that was initially known for its soccer coverage. FuboTV now includes 34 sports channels in all, featuring several other major sports such as American football and baseball. It also offers news and entertainment channels, including major broadcast networks.
And yesterday the NCTC announced the deal with PlayStation Vue, a skinny bundle with 40 channels priced at approximately $40 per month. The base bundle includes AMC, ESPN, CNN, Fox News Channel, HGTV, TNT and Discovery, as well as local broadcast networks in some markets. It also offers 60 additional channels, some on an à la carte basis. The service is available via the PlayStation gaming console, but also a range of other connected TV devices such as Apple TV, Roku, Amazon Fire TV, Android TV along with iOS and Android mobile devices and web browsers on PCs and Macs.
Pay-TV and broadband are increasingly scale-driven businesses, and it's extremely difficult to keep up as a smaller operator. Partnering becomes almost essential, as it is genuinely difficult to manage both technology development and content acquisition required to run a successful operation. In a sense, the shift to skinny bundles might actually help smaller operators, since it is easier to partner with these providers.
Nor should the NCTC stop with just two OTT providers. Hulu is an obvious option that members could offer subscribers, as well as partnering with other pay-TV providers' skinny services, such as DirecTV Now. The operator can then be a true aggregator, and let their customers pick the skinny bundle that serves them best.
However, they also need to be aware that there is a trade-off. These operators are giving up control and ownership of the video experience to another provider. The user interface and brand subscribers see will be the OTT providers, and the customer relationship with the operator may be compromised as a result.
Will this result in more churn in the long term? And if one skinny bundle provider is extremely successful, then could that provider influence the subscriber's broadband subscription decision in the future? These are the more worrying long-terms concerns from this kind of arrangement.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation