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Cable Net-Backed Philo Sees Dough in $16 Internet TV Bundle, With No Broadcast or Sports Channels

In the latest chapter in the saga of pay TV’s evolution — or disintegration — here comes Philo: The startup, after receiving $25 million in funding from five cable programming groups, has launched an over-the-top skinny TV bundle that strips out pricey broadcast and sports networks.

Philo’s base package of 37 channels mostly come from its five strategic investors, who took minority ownership stakes in the startup earlier this year: A+E Networks, AMC Networks, Discovery, Scripps Networks, and Viacom.

The hypothesis: That there’s a sizable bunch of millennials and other cord-nevers who want an affordable, easy-to-use internet TV service — and really don’t see value in forking over $50-plus each month for lots of channels, including sports networks, they don’t want to watch.

Philo actually started out in 2010. Its first service was designed to deliver streaming TV on university campuses, and that’s now available at more than 50 U.S. campuses. CEO Andrew McCollum sees a potentially much bigger addressable market with the skinny bundle offering. He acknowledges that Philo’s lifestyle-and-entertainment mix of channels won’t appeal to everyone — the service doesn’t offer ABC, CBS, Fox, NBC or popular cable channels like ESPN, Fox News, CNN or TNT.

But, according to McCollum, Philo doesn’t have to be all things to all people to make its model work. “Our goal at Philo is to build a television service that people love as much as they love their favorite shows,” said McCollum, who was one of Facebook’s founding members before moving into venture capital. He joined Philo in 2014.

To some extent, Philo’s OTT gambit will compete against already-launched services from much bigger players. Those include Dish Network’s Sling TV, DirecTV Now, Hulu with live TV, Google’s YouTube TV and Sony’s PlayStation Vue.

“Proper a la carte has yet to arrive in media and may never happen,” RBC Capital Markets analyst Steve Cahall wrote in a research note. But the traditional pay-TV bundle is fragmenting, and “Philo now gives non-sports fans the option of cutting the cord and avoiding the implied costs of sports rights through a cheaper entertainment-only alternative.”

One way Philo wants to stand out from the OTT crowd is with new social features designed for TV viewers, set to launch in early 2018. That will allow users to see what their friends are watching and their favorite shows (if they share that info) and invite others to watch TV shows together, among other features.

The programming lineup for Philo’s $16-per-month service includes A&E, AMC, Animal Planet, AXS TV, BBC America, Cheddar, Comedy Central, Discovery Channel, Food Network, GSN, HGTV, History, Investigation Discovery (ID), IFC, Lifetime, MTV, Nickelodeon, TLC and Travel Channel.

In addition, subscribers can add nine more channels for $4 extra: American Heroes Channel, BET Her, Cooking Channel, Destination America, Discovery Family, Discovery Life, Logo, MTV Live and Nicktoons.

The Philo service includes live TV and a library of VOD content, with the ability to stream on up to three different devices at the same time. It also provides a DVR with unlimited 30-day storage, plus the ability to pause any live channel, start programs from the beginning, and watch any shows that have aired in the past three days.

At launch, Philo supports web browsers (Chrome, Firefox, Microsoft Edge, Safari), Roku devices, iOS devices, and Android devices via Chrome (with an app in the works).

McCollum noted that the Philo team made a point of making signup easy: To register for a free seven-day trial account, users simply enter their phone number at philo.com.

San Francisco-based Philo’s name is a nod to Philo T. Farnsworth, the inventor of modern TV. The startup has banked $51 million in total funding, including the $25 million from the media conglomerates. Prior investors include HBO, WME, New Enterprise Associates, Rho Ventures, XFund, Mark Cuban’s Radical Investments and CBC New Media Group.

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