×

Are Skinny Bundles All Hype or the Future of TV Delivery?

Are skinny bundles a breakthrough or just a new way for television to do the same old business?

Last week, Hulu and YouTube were revealed to be in talks with NBCUniversal, Viacom, Fox and others on creating cable-channel packages to deliver via broadband. Those packages, so-called “skinny bundles,” are expected to cost $35-$40 if and when they go to market — well below the price for a typical cable subscription. But they are not likely to collapse the cable ecosystem anytime soon.

Over-the-top delivery of television is not new. Dish and Sony have rolled out skinny bundles via Sling Television and PlayStation Vue, respectively. Premium channels have reached out to non-cable customers through owned-and-operated streaming platforms (HBO), third-party partnerships and hybrids of those two strategies (Showtime, Starz).

Data on how many customers those efforts have reached remains scarce. But there does not yet appear to have been any sudden exodus from the cable-subscriber rolls. In a Paley Media Council interview last week, HBO CEO Richard Plepler said, “Less than 1% of our subscriber base has left a [cable] subscription to go get HBO Now,” referring to the network’s standalone streaming service.

“Inertia has a big impact,” says Derek Baine of S&P Global Market Intelligence, arguing that the habit will keep older customers in their cable subscriptions. “These skinny bundles will be appealing to the generation who goes off to college and probably doesn’t have their own cable subscription. They’re watching on iPads, and they’ve never experienced paying a cable bill each month.”

As those customers mature, the creeping subscriber loss that cable has suffered in recent years will continue — leaving the door open for skinny bundles to gain ground. But while their delivery mechanisms are new and aimed at young consumers, Sling, PlayStation Vue and the like are built on a fundamental element of the cable-television business: the channel bundle. The basic PlayStation Vue package forces customers to pay for low-rated channels such as Destination America and Fox Business alongside popular offerings such as Discovery Channel and FX.

Preserving the bundle has been a dealbreaker for the media companies being courted for OTT products. And as those products perpetuate the cable bundle, they remain tethered to cable’s infrastructure. Most Americans receive broadband Internet from a cable or telecom provider.  Now that Charter Communications’ acquisition of Time Warner Cable has gained FCC approval, the new company is set to have roughly 21 million broadband customers — more than any other provider except another old-schooler, Comcast.

So the same businesses that stand to lose out should skinny bundles catch on have an easy way to compensate. “The interesting thing to watch will be if broadband rates start to go up dramatically if people start fleeing their cable operators,” Baine says. “You may see that you’re really not saving that much.”

Popular on Variety

More Digital

  • The Netflix logo is displayed at

    Netflix Stock Falls After Verizon Announces Disney Plus One-Year Giveaway

    Netflix investors, already skittish about the looming entry of Disney and Apple into the competitive streaming space, pushed the stock down as much as 3.5% in morning trading Tuesday. The drop came after Verizon announced a deal with Disney to offer Disney Plus for 12 months free to all unlimited wireless customers and new Fios [...]

  • Markus Stoll (Harry G), Lisa Bitter,

    Amazon Greenlights German Series Starring Comedian Markus Stoll

    Amazon Studios has greenlit a German comedy series titled “The Bedfellow” (“Der Beischläfer”) starring comedian Markus Stoll, who is popular locally for playing a funny guy named “Harry G” who satirizes life in his native Bavaria. Shooting has started in Munich on the six-part series, which is directed by  Anna-Katharina Maier (“Die Klempnerin”) and  produced [...]

  • Disney-Plus-mobile-app

    Verizon Will Give One Year of Disney Plus for Free to All Unlimited Wireless Customers

    Verizon is giving away Disney Plus — the Mouse House’s new streaming service debuting next month — free for one year to all of its wireless customers on unlimited-data plans, under a broad new partnership between the two companies. When Disney Plus launches Nov. 12, the telco will begin offering 12 months of the video-streaming [...]

  • Discovery Launching Free Streaming Service Dplay

    Discovery Launching Free Streaming Service Dplay in U.K., Ireland

    Discovery is making a free-streaming play in the U.K. and Ireland with the launch of Dplay. The ad-supported service launches this week. It will be programmed with content from Discovery’s bouquet of free-TV channels in the U.K., which include Quest, Food Network, and former UKTV brands Really and Home. The lineup of launch titles includes [...]

More From Our Brands

Access exclusive content