The 25% increase takes effect on June 8 for all new customers, but current subscribers will be grandfathered in at $20 as long as they stay in the fold. Philo said last fall it had surpassed 800,000 total subscribers.
Along with the new pricing, the company is adding an incentive for current subscribers to upgrade and pay the extra $5 a month. It is expanding the duration of DVR storage to one year from the present limit of 30 days.
“This is something we have thought a lot about,” CEO Andrew McCollum said of the pricing change in an interview with Deadline. “We’re trying to do it in a way that’s as fair to our existing customers as possible.”
McCollum, who was a co-founder of Facebook before taking the helm at Philo, cited higher programming costs as the culprit. He said the company has sought to keep its overhead low. “We build most of our technology ourselves, we use very few outside vendors. We build on the cloud and optimize resources,” he said. “Those kinds of measures have allowed us to keep our price the same.”
Pricing in the internet-delivered pay-TV sector has been volatile, with leading players like YouTube TV and Hulu + Live TV experiencing blowback after recent increases. Disney-run Hulu, which had broken out of the pack with more than 4 million subscribers, has seen two consecutive quarters of subscriber decline. One element contributing to the upswing in prices across the sector is something Philo lacks: sports. Carriage rates for channels carrying live sports are high and getting higher, and often cause the greatest friction in distribution negotiations.
Initially known as “skinny bundles,” internet TV providers set out in the mid-2010s to deliver a comprehensive experience for a price well below conventional bundles. However, just as in the cable and satellite TV arenas, carriage arrangements with internet TV providers have gotten contentious. Rates have risen accordingly, to the point that the majority of options for cord-cutters nullify many of the financial benefits, with monthly rates above the $50 or $60 threshold. Sony PlayStation Vue, an early pioneer in internet-delivered TV, decided to exit the business entirely in 2020. AT&T TV Now (formerly DirecTV Now) has faded dramatically after an initial splash in 2017.
Holes in programming also have developed in the sector, which reaches about 11 million total subscribers. FuboTV parted ways entirely with WarnerMedia’s entire network portfolio last year, for example. Dish Network’s Sling TV service has been without the Bally Sports regional sports networks (formerly the Fox RSNs) or HBO for years. Tension also has arisen between digital natives — as part of a weeks-long carriage dispute, Roku removed YouTube TV from its channel store, limiting the TV bundle’s access. YouTube then added a work-around in its main app.
Drawing on its roots as a TV service for college campuses, Philo intentionally carved out sports when it launched commercially in 2017. It focused instead on general entertainment offerings from programmers like Discovery, Viacom, A+E Networks, AMC Networks and others. Many content suppliers also made investments in the company and remain minority stakeholders.
Philo went from a targeted college service to a national commercial entity in November 2017, offering 37 channels. Today, it has 63 channels as well as free, ad-supported offerings Bloomberg Television, Cheddar, Crackle and Revry. Premium networks Epix and Starz are available for extra fees.
“Our contracts with our content partners include fees we pay that go up every year, and a significant part of the cost of Philo is driven by our platform and billing partners,” McCollum wrote in a blog post. Even with internal controls on spending, he added, “We can’t offset these rising costs indefinitely, and this change reflects that reality.”
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.