Launching your own streaming video service? So passé. The new hotness is launching your own skinny bundle of live TV channels — or at least saying you will. Tech companies have been rumbling about getting into live TV for years: An Amazon TV package has been rumored for months; Apple has been in on-again, off-again talks with the TV networks about this for years. YouTube, not to be outdone, has been rebuilding its technical architecture to deliver a coming live TV service called “Unplugged,” Bloomberg reported.
But in trying to enter TV, tech is figuring out what cable distributors have long known: Signing up all the TV networks required to launch a new service is an expensive, arduous task. And yet the last 12 months have seen two breakthroughs: Sony Corp. launched a package of channels called “Vue” on PlayStation while Dish Network launched a slim package for cord-cutters called “Sling TV.”
And then there’s Hulu, which confirmed Wednesday it, too, plans to deliver live TV, bypassing traditional cable TV for a web-delivered (so-called over-the-top, or OTT) package of channels. Largely overshadowed by the likes of Amazon and Netflix in the on-demand streaming world, Hulu now finds itself in the best position to invent the future of TV.
Hulu has a home court advantage for a number of reasons. Most obviously, it’s owned by three of the biggest media companies in existence: 21st Century Fox, the Walt Disney Co. and Comcast (through NBC Universal). Although relations with its owners were a bit fraught at the beginning — the networks grumbled at what they considered a lack of transparency — the partnership has smoothed, particularly with the installation in 2013 of current Hulu CEO Mike Hopkins.
As former head of distribution for Fox, Hopkins came from the very industry he is now trying to disrupt. Hulu’s executive team, in fact, is stacked with former network players with distribution experience. These are people who made their bones by haggling with Comcast, Time Warner Cable and DirecTV, who know the difference in value of an expensive, mega studio-produced show as it airs live, appears on-demand or is watched via a streaming service. Network sources say because Hopkins and his team already have deep ties in the industry, the odds are far more in their favor when it comes to convincing programmers to allow Hulu to carry their programming live.
YouTube has a much tougher row to hoe. It may have added bona fide TV exec Susanne Daniels from MTV in 2015, but Daniels was a programming executive, not the one playing hardball with Dish Network. YouTube parent company Alphabet Inc. has discovered that becoming a pay-TV provider is not as simple as telling programmers you want to carry their content and handing them some money. TV is a low-margin business — so low-margin, many smaller cable companies are thinking about opting out in favor of providing just internet service to their customers.
It doesn’t help that several TV executives International Business Times interviewed actually laughed at the idea that they’d hand over their live content to the company that has been a thorn in their sides since its earliest days, a hotbed of bootleg versions of their shows or other unofficial uses of their content.
Cost also likely will be an equally significant hurdle, even for an outlet with pockets as deep as YouTube’s. Sources at other streaming entities that have attempted to build live TV packages say networks will charge YouTube rates far above what Comcast and Dish pay, and YouTube won’t just absorb it.
With just an antenna, you can get 40 to 70 live local channels for free, including the broadcast networks; to justify the $35 or $40 price YouTube is seeking, they’ll need live channels that YouTubers actually want to watch, something akin to Sling TV or PlayStation’s Vue packages.
But Sling and Vue were able to negotiate those packages because of their backers: Dish Network and studio Sony. The TV industry looks on tech companies like Google and its ilk with a little more suspicion, feeling — justified or not — that the newcomers don’t place the same value on content as traditional distributors do.
One executive noted it’s more than a little ironic the techies are suddenly clamoring for the very product they’ve helped degrade by fast-forwarding us into an on-demand world. The companies that are most likely to succeed in these “old-school” ventures are those that show they know how to play the networks’ games.