YouTube TV announced it is adding 7 networks from Turner to its base package, including Adult Swim, Cartoon Network, CNN, TBS, TNT, truTV and Turner Classic Movies. YouTube TV will also add NBA TV and MLB Network to its base package soon, with NBA League Pass and MLB.TV available for additional fees. YouTube TV is also raising its rate by $5 to $40/month on March 13th, though all subscribers on board prior to then will be grandfathered at the current $35/month rate.
VideoNuze readers know I’ve been skeptical about how big the market opportunity is for skinny bundles like YouTube TV. A big challenge for skinny bundles has been striving to offer a sufficiently complete channel lineup to have broad appeal, while also keeping programming costs down, so consumer pricing is low enough to be a differentiator. At a more specific programming level, I’ve believed that skinny bundles had to carry the big 4 broadcasters in local markets given their still dominant viewership. Doing so is a tough, expensive slog.
YouTube TV is addressing these challenges, particularly on the broadcast side. Now available in over 80 U.S. TV markets, the service carries the big 4 in virtually all of them. However, on this page, it is very transparent about which markets it only has VOD rights for now. The fees YouTube TV is paying for the broadcasters is likely pretty steep, but I give YouTube TV’s team credit for realizing they were must-carries in order for the service to succeed, though the downside is that YouTube TV is almost certainly unprofitable today at $35/month.
Beyond the broadcasters, YouTube TV now has the Turner networks, Disney networks, Fox networks and NBCUniversal networks among others. The highest-profile missing networks are from Viacom, Discovery, A&E and Scripps. I’m guessing those will come soon too. Then there are all the included features like unlimited cloud DVR, 6 accounts per household and support for multiple devices.
YouTube TV only launched last year and is estimated by The Diffusion Group to have approximately 300K subscribers at the end of 2017, trailing Sling TV, DirecTV Now, PS Vue and Hulu with Live TV. But YouTube TV’s high-profile marketing, such as being the presenting sponsor of last year’s World Series, suggests Google is willing to support YouTube TV with its deep pockets.
More broadly, with its massive user base, YouTube itself can heavily promote YouTube TV (I constantly see offers when I’m on YouTube). My hunch is that Google sees YouTube TV as a strategic opportunity to pursue TV ad dollars. How long before YouTube TV approaches the networks it carries and asks if it might take a crack at selling some of the ad inventory to see if it can use its data set to drive a higher rate? It would be a smart strategy by Google to pursue.
In the meantime, I think YouTube TV will continue to grow strongly. The offer is getting better all the time, it’s being heavily promoted and there’s an ever-expanding universe of cord-cutters and cord-nevers to appeal to. No, I’m not becoming a raging bull on skinny bundles, but I am warming to the market opportunity.
Categories: Skinny Bundles
Topics: YouTube TV