Skinny bundles set to outgun traditional US pay-TV | Media Analysis | Business
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Research from Ampere Analysis suggests that the recently launched skinny pay-TV bundles offer more return than traditional US pay-TV packages, making the switch to so-called ‘virtual’ pay-TV potentially lucrative for channels.

ampere 10august2017The analyst believes that with US pay-TV operators coming under increasing pressure from the cost of carriage fees, and the increasing availability of streaming pay-TV offers as well as the skinny bundles from the likes of DirecTV NOW, Hulu Live and Sling TV, channel distribution has become more complex than ever. This is said to be leaving subscription channels with the problem of balancing demands to join skinny bundles with support for core business models.

The cost for joining the skinny package parade seem clear: Ampere calculates that streaming pay-TV package-level revenue per channel is three times stronger than for traditional offerings. That is to say $0.59 in gross revenue for each channel carried in streaming packages compared with $0.23 per subscriber form traditional operators.

Ampere also accepts that there may be a point of contention in its reckonings with regards to carriage fees charged to include US national networks in streaming packages. Yet, even removing the cost of carrying US national networks, it calculates that the remaining revenue per channel for vMSO packages still stands at $0.48, more than double the average for traditional pay-TV.

“US pay-TV operators have needed to balance carriage fees and revenue for a long time,” commented Ampere Analysis research director Guy Bisson. “However, with the increasing migration of pay-TV subscribers to OTT services, that balancing act is only set to become more precarious. Despite the fees they are charged to include US networks in their streaming packages, vMSOs have made a better job of reconciling the carriage fees versus revenues per channel equation. Taking out the fees associated with the networks, they are still left with revenues of, on average ... almost double that of traditional pay-TV operators. For channels, the shift to streaming and rise of vMSOs looks like a potentially strong plus – providing they have strong enough brands to make the cut.”

Whilst noting that carriage fees paid to channels vary greatly, Ampere Analysis believes that by measuring revenue per channel carried, the US operators that look to be under most pressure from carriage fees are DISH, Verizon, DirecTV and Century Link. These operators, it notes, have a high number of channels and commensurate lower revenue per channel based on their current customer ARPU levels. In contrast, those operators with the highest income per channel and which look to be in a relatively strong position are cable operators Comcast, Charter, Suddenlink and CableOne.

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