After another disastrous quarter for pay TV, distributors are looking to new video packages - and it might be their only option
- The pay-TV industry just had its second-worst quarter of subscriber losses.
- To blunt the damage, MVPDs will try to appeal to viewers with more specific content bundles.
- It might be the only option available to them as they fight against subscriber losses.
Pay TV had another disastrous quarter of subscriber losses.
Some analysts are projecting the industry lost almost 1 million subscribers in the fourth quarter, the second worst only to a quarter before, when the sector lost more than one million subscribers.
To stave off further declines, MVPDs are considering new video content offerings, Darcy Antonellis, who runs Amdocs Media, told Business Insider.
Amdocs provides top MVPDs like Comcast, AT&T's DirecTV, and Dish with customer engagement and analytics help to better understand their customers.
Antonellis sees MVPDs moving past the typical "skinny bundle" packages that contain fewer channels than traditional cable and trying out themed content packages aimed at digital-first audiences.
The company has been building what it calls "micro-packs" of video content for MVPDs around topics like cooking, kids, and Bollywood.
International MVPDs already offer such packages, and based on conversations with US clients, the Amdocs expects them to be available there in the future. The company wouldn't identify the clients, citing a need to protect its competitive advantage.
Distributors elsewhere use the packages as a free perk to retain current subscribers as well as selling them to generate more revenue. In Africa, for example, TelOne Zimbabwe offers a package of music videos and Hollywood content to some subscribers.
Companies can use such offerings to prop up other parts of their business. A telecom company could offer free video content to households with mobile phone services to boost data usage, encouraging people to keep their mobile and video services.
Comcast - which lost 344,000 subscribers in 2018, nearly double the 186,000 it lost the year before - has said it plans to win back customers by developing skinnier bundles; unbundling the "triple play" of broadband, video, and phone; and introducing a greater variety of price points, Matt Strauss, a Comcast EVP, told Business Insider. Such strategies may be one of the few options available to distributors.
Read more: Meet the power players of Comcast who will do battle with Disney and Google in the year ahead
MVPDs don't control their programming costs and content owners, not MVPDs, determine which channels they will package together. That leaves MVPDs with few ways to retain subscribers other than trying different ways of bundling content or better tailoring it to customers, Dan Rayburn, a media analyst at Frost & Sullivan, told Business Insider. That's also why MVPDs have begun to acquire more content, Rayburn said. AT&T bought Time Warner last year and Comcast purchased NBCUniversal in 2011.
Companies also use live streaming services to promote and upsell other products and services or platforms, he said. For example, the PlayStation Vue streaming service is all about selling Playstation gaming console, Rayburn said.
And the video field is about to get more fragmented, with AT&T's WarnerMedia and Disney set to launch streaming services this year.
Rayburn predicted cable operators' subscriber losses would slow, giving MVPDs an opportunity to develop more offerings to hold on to customers.