You will be redirected back to your article in seconds

OTT Startup Layer3 Begins Pumping Fat $75-Plus TV Bundle in Chicago, Via Comcast and Others

Bucking conventional wisdom that consumers are gravitating toward “skinny” pay-TV bundles, Layer3 TV has launched a big, fat honking package in the Chicago area that is priced starting at $75 and costs as much as $150 or more for the full package.

It’s not clear that Layer3’s ambitious, upscale over-the-top play will succeed in attracting a sizable user base. The startup faces pretty big headwinds. Besides evidence that people want cheaper pay-TV bundles (not large, expensive ones), there’s the company’s delivery model, which relies on delivering content directly over the broadband networks of cable and telco companies — the very providers that Layer3 will compete with for its fat TV bundle.

In the Windy City, Layer3’s allHD package with more than 144 high-def channels became available over Labor Day weekend. It also plans to launch soon in Denver, where the company is headquartered, and in Washington, D.C., with additional markets eyed for 2017.

According to Layer3 CEO Jeff Binder, unlike competing OTT pay-TV services like Dish Network’s Sling TV, Sony’s PlayStation Vue and Hulu’s forthcoming live-TV package, Layer3 video doesn’t ever traverse the public internet — it carries the streams over its own managed network, and then delivers those over the last-mile broadband infrastructure of ISPs with which it has interconnection agreements. That, in theory, ensures more reliable delivery of high-bandwidth live TV streams. In the Chicago market, Layer3 has interconnect deals with Comcast and other providers (which Binder declined to name).

But that also means to get Layer3 in Chicago today, users must be broadband subscribers of Comcast or one of the other ISPs that Layer3 is directly connected to. And for now, relying on specific ISPs will limit the startup’s potential customer base and how quickly it can launch new markets.

Layer3 execs believe that its supersized TV strategy, coupled with an advanced guide, will indeed ring the cash register.

The company says the allHD Platinum package delivers more HD in an entry-level package than any other provider and that it will eventually make available over 200 HD channels with additional options for add-on such as individual channels, thematic genre tiers and premium add-ons. In addition, the service provides access to more than 20,000 movies and TV show episodes on-demand. Layer3 has distribution agreements with media companies including Fox, Disney and ESPN Media Networks, Turner, NBCUniversal, Viacom, CBS, Discovery, HBO, Starz, Epix, Scripps Networks Interactive, as wells as regional sports networks from Comcast, Fox Sports and Pac-12 Networks.

“The industry’s universal support for innovation has been astounding, resulting in our launch of an entry-level offer that includes virtually every channel,” said Layer3 TV chief content officer Lindsay Gardner.

Layer3 touts is user interface as head and shoulders above the rest of the pay-TV pack. The company has declined to provide images of what the UI looks like but says it uses a patented “visual navigator” that helps users find the most relevant TV shows quickly. In addition to providing a guide for live cable and broadcast television channels, the Layer3 UI also integrates social-media properties such as Facebook and a variety of other applications. The system also provides voice search and control.

Naturally, Layer3’s programming partners are excited about it — because it’s based on the big, old-fashioned bundle, in which subscribers pay for their entire channel suites. “Layer3 TV’s user interface and packaging options offer a fantastic environment, taking advantage of the latest technology to present our content,” said Justin Connolly, executive VP of affiliate sales and marketing for Disney and ESPN Media Networks, in a statement provided by Layer3. We continue to look for new ways to reach consumers and Layer3 TV offers a great avenue to do that.”

But will consumers share the same enthusiasm for a fat OTT bundle, especially given that they’re able to get pay TV from their cable or telco provider already?

Only 33% of consumers said they’d expect pay more than $50 for an OTT service as a replacement for traditional cable or satellite TV if it included regional sports networks, according to a MoffettNathanson survey of 513 consumers conducted in July by research firm Survata. Nearly half (47%) said they would be willing to pay no more than $30. Even with an elegant user interface, Layer3’s offering may be too rich for the blood of cord-cutters or even existing pay-TV subs.

In any event, Layer3 appears to have plenty of cash to sustain it for the near future. Founded in 2013, the company has raised more than $100 million from investors including Evolution Media Partners — whose shareholders include TPG Growth, CAA and Jeff Skoll’s Participant Media — French telecom company Altice (which owns Suddenlink and Cablevision Systems), John Paulson’s Paulson & Co., and North Bridge Venture Partners.

Pricing for Layer3’s allHD service starts at $75, going up from there depending on programming options and configurations. Subs with several TVs and the entire channel lineup may have packages that cost $150 or more per month. Layer3 says its packages “are always competitive” compared with incumbent pay-TV providers.

More Digital

  • Google Stadia is a Net Neutrality

    Google Stadia is a Net Neutrality Nightmare

    At the Game Developers Conference (GDC) this year, Google announced that it has taken up the long and ever-lengthening dream of the video game streaming service. Meant to replace the hefty, pricey, altogether confounding experience of buying and using various gaming hardware, Google Stadia will run video games on Google’s own hardware in a server [...]

  • crunchyroll logo

    Crunchyroll Raises Subscription Price to $7.99

    AT&T-owned anime subscription video service Crunchyroll is raising its monthly subscription price from $6.95 to $7.99 a month, it announced in an email to members Friday. It’s the service’s first price increase ever, according to a spokesperson. The new pricing will go into effect on May 1 for new subscribers, while existing members will see [...]

  • StyleHaul

    StyleHaul Shuts Down U.S. Operations, Lays Off About 65 Employees

    The axe is falling on StyleHaul: The fashion, beauty and lifestyle digital media and marketing company owned by RTL Group is shuttering U.S. operations, resulting the layoff of around 65 employees. StyleHaul offices in L.A., with about 55 employees, and in New York City, with around 10 staffers, are closing. RTL said StyleHaul’s U.K. operations, [...]

  • Bandsintown Platform Acquires Hypebot, MusicThinkTank

    Bandsintown Platform Acquires Hypebot, MusicThinkTank

    Bandsintown, a leading platform for letting music fans know about upcoming concerts by their favorite artists, has acquired Hypebot, a news site publishing stories about the music industry and technology, and its sister site MusicThinkTank. “I’m proud to share that Hypebot and MusicThinkTank have been acquired by Bandsintown,” wrote Bruce Houghton, the founder of the [...]

  • Vertigo Games Believes ‘Location-Based Virtual Reality’

    Vertigo Games Believes ‘Location-Based Virtual Reality’ Is Future of VR

    As virtual reality becomes more and more available, many developers are looking for new frontiers to expand the experiences offered by the tech. For Netherlands-based Vertigo Games, that next frontier is what they call “location-based virtual reality.” It’s essentially high-quality VR experiences where players aren’t tethered to a PC or even to the confines of [...]

  • GDC 2019: Google's Play For Gaming

    GDC 2019: Google's Play for Gaming Ubiquity, Rise of Ray Tracing, Store Wars

    The Game Developers Conference finished up Friday evening, wrapping one of the most exciting GDCs in recent memory with Google’s splashy entrance into AAA video gaming, the emergence of real-time ray tracing as a compelling technology for film, TV, and games, and the growing war between two global estore powerhouses: Valve’s Steam and the Epic [...]

More From Our Brands

Access exclusive content