Diminishing number of US vMVPD subs also taking legacy pay-TV | Media Analysis | Business | News | Rapid TV News
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Research from TDG has found that as virtual multi-channel video platform distributors (vMVPDs) in the US have expanded their offerings, the number of those taking these skinny TV bundles as well as traditional TV has fallen sharply over the last two years.
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The study found that by April 2020, 23% of virtual pay-TV households in the US also subscribed to a traditional cable, satellite or telco pay-TV service. This compared with 37% of dual-service use in 2018, a peak time when Sling TV dominated the landscape, leaving many users without live programming from the big-4 national broadcast networks of ABC, CBS, Fox and NBC. TDG added that given their absence from the Sling offering, as well as widespread uncertainty as to the replacement value of virtual pay-TV services, two-in-five virtual users needed a second pay-TV service to satisfy household needs.

TDG found that among the 23% of vMVPD subscribers that use a legacy pay-TV service, such use was justified by the programming requirements of the household, as well as the need for a second service when away from home. Notably, 71% of dual-service users saw their legacy service as primary, that is, the service used most often at home.

In addition, Hulu Live TV and YouTube TV have emerged as market leaders, both of which include the four major broadcast networks. Hence, said TDG the need for a second pay-TV service has diminished significantly.

Yet according to TDG co-founder and president Michael Greeson, simply adding legacy and virtual pay-TV subscription counts to arrive at cumulative estimates of pay-TV subscriptions was invalid. “The overlap between the two services should be recognised, as it is quite real, and speaks to the continuing reticence about service substitution value among many virtual pay-TV users,” he noted.

Greeson added that, as more channels have been added to skinny bundles which previously defined virtual pay-TV services, its substitution value has improved. “Most OTT pay-TV services now provide a full complement of both broadcast and cable channels, meaning they are more capable of competing head-to-head with ‘fat’ legacy offerings,” he observed. “This, in turn, has led to a decline in the number of dual-service users.”