Jessica Reif Cohen, longtime media analyst at Bank of America Merrill Lynch, said virtual MVPs (aka “skinny bundles”) from the likes of Dish, DirecTV, Hulu, YouTube and Sony “so far are one big yawn, a big nothing” in terms of penetration and subscribers.
Her comments came during a lively panel discussion among four front-rank Wall Street analysts at the NAB Show New York, which was held Wednesday and Thursday.
Because “churn is extremely high” and many of the services “just mimic the traditional bundle,” Reif Cohen said subscriber levels remain fairly low. (Analyst reports have pegged Dish’s Sling TV, DirecTV Now and Sony PlayStation Vue combined at just north of 3 million. Hulu and YouTube are new enough not to have reported numbers.)
Heading toward 2018 and beyond, she added, Hulu and YouTube TV stand a good chance of sticking around, she said, based on the quality of their interfaces. Plus, “the parent companies of Hulu are very well-positioned on the content side” and unlike others could offer a wide range of programming, from sports to entertainment to news to family fare. Davis Hebert with Wells Fargo countered that niche OTT offerings would have a better shot at survival than general bundles.
Reif Cohen also argued that traditional cable still has the best distribution model because they unify programming in a way the fragmented OTT world does not. “The proliferation of choices may end up pushing people back to the bundle,” she said. “It might get smaller, it might get cheaper. But at the end of the day, the confusion may end up helping the bundle.”
Panelists took up the oft-debated question of M&A activity and the looser regulatory stance of the Trump Administration. Jinhy Yoon of Pimco said that while she fully expects a healthy amount of deal flow (as do her fellow panelists), “I would have thought we would have had more by now,” given Trump’s pro-business DNA.
Tuna Amobi, director of equity research for CFRA, sees Disney’s bold OTT strategy “beginning of a new paradigm” for major content owners. “A huge amount of revenue is at stake here. … It goes back to the deconstruction of the traditional model. You’re going to see a lot more companies trying to experiment and have a more direct relationship with the consumer.” Reif Cohen pointed out that Disney is “a different animal.” Because the company owns massive content drivers like Marvel, Pixar and Lucasfilm, “They can do this … they’re creating a revenue stream that Netflix doesn’t participate in and in our subjective view, it’s the right thing to do.”