T-Mobile is at a crossroads with its streaming-video bundle, TVision, and everything is on the table — including shutting it down
- T-Mobile is at a crossroads with its online streaming service, TVision.
- The phone giant may have to raise prices or shut down, said people familiar with the matter.
- T-Mobile isn’t the first telecom operator to struggle to execute a profitable streaming strategy.
- See more stories on Insider’s business page.
Phone giant T-Mobile is at a crossroads with TVision, its nascent low-priced streaming video service, two people familiar with conversations say.
The venture has had a slew of problems since Day 1, and a small group of senior executives have been huddling about its future, leaving other staffers out of the loop, upset and confused, they said.
T-Mobile is coming up on renewal talks with some programmers for TVision, which will force the company to decide whether to proceed with the offering, said those people, who are familiar with the company. The service is still being advertised on T-Mobile’s website.
Additionally, MobiTV, the app-based platform that TVision runs on, filed for Chapter 11 on March 1, which could complicate TVision’s future, they said.
If T-Mobile decides to shutter TVision, it could have a write-down of several hundred million dollars and impact its 300 to 400 staffers that are based in Denver and in Bellevue, Washington.
It’s unclear whether T-Mobile has made a final decision on TVision’s future. The company could also decide to keep TVision as is, or hike the price for consumers, as other virtual video bundles have done. It could also look to sell the initiative and have someone else operate it under the same brand name.
Asked if the phone giant plans to close the service or raise prices on TVision, a T-Mobile spokeswoman declined to comment on what it described as “speculation and rumor.”
T-Mobile isn’t the first telecom operator to struggle to execute a profitable video streaming strategy. In 2018, Verizon shuttered Go90, taking a $900 million charge. Japanese electronic giant, Sony shuttered its virtual programming offering Sony PlayStation Vue in 2020.
T-Mobile has bragged that its 102 million-strong subscriber base would enable it to offer mobile video bundles cheaper than competitors. But when the company tried to offer so-called skinny bundles, programming partners cried foul since their contracts entitled them, they argued, to be included in basic plans.
TVision launched in November to mixed reviews, with its cheapest bundle offered for $10 per month, but some programmers were angry at being left out of the discount tier while others in the $10 bundle were angry at being left out of the $40 package. T-Mobile also offers a $40-per-month tier for 60 channels, a $50 tier for 85 channels and a $60 tier for 95 channels.
People familiar with programming deals say the economics likely left T-Mobile with a big problem: Each tier cost the company much more than it was selling it for at a time when programming costs are rising. Broadcast networks for instance will be looking or distribution partners to defray the cost of new NFL rights fees that in some cases doubled. Another virtual video service, Hulu Live TV, which competes with TVision, hiked prices by $10 in November, with its standard package at $64.99 per month.
In 2017, T-Mobile spent $325 million to acquire a cable company called Layer3TV, then rebranded it as TVision Home and soon after shuttered its service. T-Mobile’s chief content officer, Lindsay Gardner, who negotiated the programming deals, exited after internal disagreements about strategy and the company’s obligations to its programming partners.
After TVision Home shut, T-Mobile put its energy behind its online streaming service TVision, which launched on November 1. But almost immediately, T-Mobile’s fresh initiative drew fire from programmers who felt that T-Mobile had breached deals.
Discovery, NBCUniversal, and ViacomCBS were upset with TVision’s bundling strategy, according to Variety.
“We were very surprised with how T-Mobile decided that they were going to bundle our networks, particularly because we have a clear agreement where our networks are required to be carried on all their basic tiers, over-the-top offerings,” Discovery chief executive David Zaslav said on an earnings call in November. “We don’t believe they have a right to do what they’re doing right now, and they know it’s very clear to them and they are focused on it, so.”
One of the people familiar with current conversations at the company told Insider that T-Mobile put the angry programming partners into the $40 package, which could be costing T-Mobile an estimated $70 in programming fees.
“They’re faced with a brutal decision,” this person said. “They’re going to have to raise prices, in a place where the culture of the company is, you never raise prices.” The alternative is to shut it down, they said.
T-Mobile sees video as a way to keep phone customers in the fold, but it hasn’t had much luck with streaming services. It offered subscribers Jeffrey Katzenberg’s Quibi as a free add-on for certain phone subscribers last spring, but Quibi shut down months later as the pandemic took hold. T-Mobile also offers Netflix to certain family plan subscribers.
Source: Read Full Article