Two out of every five respondents believe skinny TV bundles offered by pay-TV operators are a sensible response to cord-cutting, according to a recent poll conducted on Telco Transformation.
When readers were asked, "Are skinny bundles a viable strategy for pay-TV operators?" all possible responses got some support. But 42.3% of respondents picked the first option, "Yes, skinny bundles will save operators from cord-cutting."
Skinny TV bundles, or slimmed-down, lower-cost channel packages distributed over the Internet without any contracts, have gained popularity in the past 15 months or so, as younger viewers in particular have been abandoning pay-TV services. Operators have responded to this cord-cutting by launching skinny bundles such as Dish Network LLC (Nasdaq: DISH)'s Sling TV and AT&T Inc. (NYSE: T)'s DirecTV Now. OTT providers such as YouTube Inc. and Sony PlayStation have also launched their own equivalent services, and Hulu LLC is expected to offer its own version later this year. (See Tough Week for Traditional TV, Skinny TV Bundle Competition Heats Up and Cord-Cutting Hits New Heights.)
Are Skinny Bundles a Viable Strategy for Pay-TV Operators?
Source: Telco Transformation Flash Poll, February-March 2017
While the largest group of respondents felt skinny bundles would help pay-TV providers hold on to subscribers, nearly 27% were less convinced. Concerned about lower margins for operators as a result of lower-priced packages, these respondents felt that skinny bundles would only help if demand for them was limited to a niche group. If the broad majority of subscribers end up opting for skinny bundles, the business case might suffer.
As one respondent put it, "For skinny bundles to be viable while protecting cable operators' core businesses, they'll have to be very targeted and limited, but they can indeed work."
Another 15% felt that operators had no choice; this was the only option they had to maintain their relationship with their subscribers, as OTT services tear into traditional pay-TV pricing and packaging models. However, respondents didn't necessarily see this as resulting in lower prices over the long term. As one respondent said, "The larger play is content ownership. Every bit of content will soon be siloed into skinny bundles and very expensive all-you-can-eat plans... "
Another agreed, saying "I expect content distribution prices to stay in the higher range (typical cable rates) for streaming. The result will be high-priced a la carte and skinny bundles. Not great. Probably no better deal than traditional cable..."
Another 7.7% felt that the margins on skinny bundles were just too low and it was not a viable approach for operators; while the exact same percentage felt that skinny bundles would fail because they weren't attractive enough to compete with OTT services.
The overall message from this research isn't particularly cheery. While some respondents see skinny bundles as a solution, others are more doubtful, and still others see higher prices for video services (of any kind, from any provider) as being inevitable.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation