vMVPD Channel Bloat Worsens With Hulu-Viacom Deal

VMVPD Pricing
Cheyne Gateley/VIP

Virtual MVPDs — services delivering broadcast and cable TV networks via the internet — continue to defy logic.

Originally launched in 2015 amidst consumer clamor for à la carte cable TV, with Sling TV a slimmed-down alternative to cable, most services now offer a bloated number of networks, replicating the lineups of basic cable.

Hulu’s new carriage deal with ViacomCBS, adding 14 networks to an already large lineup, is the latest in a long line of vMVPD operators cutting deals with media congloms and upping the channel count.

What once offered freedom of choice, with providers promoting different combinations of networks, is now a bland selection where most services offer the same network lineups. The only thing to choose is if you want to pay extra for a cloud DVR that can fast-forward (Hulu) or have a service that includes it as standard (YouTube TV).

Once new networks are announced, price hikes invariably follow, as was the case for Fubo and YouTube TV, with YouTube’s 2020 $15 increase occurring coincidentally after adding 14 ViacomCBS nets. What makes the Hulu-ViacomCBS deal different is it was announced less than a month after Hulu’s recent December 18 $10 hike.

Unlike Fubo and YouTube TV, Hulu did not add any new networks in 2020, although it did announce a carriage deal for WGN America on the same day as the $10 increase in December. Hulu’s 2020 lineup actually shrank last year, removing Sinclair-owned regional sports networks in October.

This could mean that the latest price increase was made knowing a deal would soon be announced for ViacomCBS content. Given YouTube TV had to increase its fees by $15 after adding the same channels, a further increase could be expected in the coming months.

The vMVPD business has proven to be tough to make a profit in. Operators have been willing to sit back and wait for their subscriber base to reach a scale that makes it profitable to deliver targeted ads, which carry a greater CPM rate.

The problem is that this takes time, and customers have had to be lured in with unsustainable deals where vMVPDs are spending more than their subscribers are paying. This is why Sony exited the market a year ago, and why AT&T TV Now has shed subscribers at an alarming rate as they sought to end promotional pricing.

Hulu is currently the market leader in the U.S., but this position would be at risk if prices rise again. One way around this would be to introduce service tiers, enhancing their current “Entertainment Add-On” offering. Former Hulu CEO Randy Freer had proposed breaking the channel lineup into bundles in 2018; perhaps it is time to dust those plans off.

With only one vMVPD service — Sling TV — offering anyone the ability to subscribe to less than 40 networks, the swelling of Hulu With Live TV means the cliché reference of vMVPDs as “skinny bundles” must be retired. Unless Hulu splits its offering into different bundles, the bloated lineup further muddies the distinction between internet-delivered and cable-, satellite- or fiber-delivered TV.