With operators in the suddenly struggling market for over-the-top pay TV services beginning to openly lament their lack of profitability, and one major player expressing intent to tweak its pricing and packaging, fuboTV co-founder and CEO David Gandler told MCN this week that he wouldn’t be surprised if at least one significant vMVPD service shut down in 2019.
“It’s a tough market,” said Gandler, who was careful to note that fuboTV’s just announced expansion into Spain reveals that his startup may not be feeling the same pain as its corporate behemoth competitors.
“If you can’t figure out how to make money on this, why would you do it?” Gandler added. “I think you’re going to see people saying, ‘Either I missed something, or we’re not executing.' I would anticipate that there will be companies that will have to rethink their strategy.”
Related: AT&T’s New DirecTV Now Plan: ‘Thin Out’ Bundle, Reset Price Point to ‘$50-$60’
That already happened this week. AT&T CEO Randall Stephenson told investors that the company plans to “thin out” the bundle for vMPVD DirecTV Now and adjust its monthly price up to $50 to $60.
“We were asking this DirecTV Now product to do too much work,” Stephenson said. "So we’re thinning out the content and getting the price point right; getting it to where it’s profitable.”
Meanwhile, during Dish Network’s third quarter earnings call last month, company Chairman Charlie Ergen expressed frustration at the low-margin business model of Sling TV.
Asked if Sling TV is profitable, Ergen remarked, “It depends on how you look at it. But under Charlie Ergen's definition of profitability, I think I'd like to make a little bit more money than we're making today.”
FuboTV is competing as a well backed start-up against a range of large corporately backed competition, which also includes Google’s YouTube TV and Sony PlayStation Vue.
With a recent $75 million funding infusion, fuboTV is in expansion mode, becoming the first vMPVD to enter an international market at a time when its competitors are rethinking strategy.
“Until now, the virtual MVPDs are alike in that they have no experience in international markets,” Gandler said. “It is not easy to launch a virtual MVPD, and it is much harder without the ability to leverage millions of existing subscribers, retail stores, customer call centers and other factors that have helped them have early success in the U.S. Our advantage is that we have never had that leverage, yet we have been able to build a successful business around our own tech stack, the ability to be nimble and, frankly, out-punch our weight class. As a digital native company that was created for this OTT space, we are tapping into the playbook that has worked in the U.S. to have success overseas.”
