nScreenMedia OTT multiscreen media analysis

The impending battle over skinny bundles

Playstation Vue

Though nobody in the traditional television establishment is exactly sure what a skinny bundle is, it looks like a battle is brewing to make sure their TV channel content is a part of it.

The term “skinny bundle” is thrown around a lot in the industry these days, but it has become pretty difficult to define exactly what it is. With the launch of Sling TV, Dish Network was the first to launch an OTT services that was decidedly skinny. With just 21 premium cable channels for under a quarter of the price of the typical pay TV subscription bundle over-the-top, it set the bar for a light approach to pay television.

Sony Playstation Vue launched with 60 channels in the base bundle for $60 a month, and it too was referred to as a skinny bundle. The service received a boost earlier this month, with the announcement that ESPN and other Disney channels would be joining the service. To celebrate, Sony launched the service nationally, even though it could only provide local channels in 7 metropolitan areas. The service got a big price cut, which Variety says is $29.99* a month for the “Access Slim” entry package of 55 channels, including ESPN and Disney.

It looks like we will have more entries in the skinny bundle stakes, with ESPN’s John Skipper semi-confirming that Google and Apple are also negotiating for TV rights for their own package.

For comparison, Comcast’s Digital Starter package includes 140 channels at a base price of $54 to $75 a month, depending on your market. Of course this doesn’t include rental fees for the set-top box or DVR.

Bob Iger CEO Disney

Bob Iger, CEO Disney

All of this slimming of the channel bundle has gotten the attention of the traditional media providers. Disney Chief, Bob Iger, isn’t sure what a skinny bundle is either. Speaking at the Deutsche Bank 2016 Media, Internet and Telecom Conference earlier this month, he said:

Is there a fantastic or perfect skinny bundle out there, I actually don’t know… .What their components are? I don’t know, but I think they are going to serve a customer that isn’t necessarily that interested or can’t be served by the big bundle…”

Les Moonves, head of CBS, is similarly confused about exactly what skinny bundle is, but he doesn’t need to be convinced of its viability:

Someone’s going to figure out how to do this and how to give people what they want to watch and it’s not for $100 a month, it will be for $35 or $39 dollars a month where you’ll really get the 12 to 15 or 18 channels that you care about. And not get the karate channel for 25 cents a month. That doesn’t make sense anymore.”

One thing about skinny bundles, however, has not confused Mr. Iger: he is sure ESPN needs to a part of them. When asked about how he plans to deal with the decline in ESPN subscribers, he sees skinny bundles as a key part of a fragmenting content landscape:

So you will end up with essentially a mix of products that include ESPN. The expanded basic bundle, which will be the dominant one, skinnier bundles, which ESPN needs to be part of and then some direct-to-consumer proposition…”

This creates a real conundrum for the TV industry. Skinny bundles by definition have a small number of channels. Getting into the base bundle is nonetheless as important as it has ever been. That means a lot of channels currently in pay TV base packages are going to get shut out of the skinny base bundle.

And if Mr. Moonves is right and skinny bundles really take off, we could see the biggest game of musical chairs ever. I wonder who will have a seat when the music stops.

Why it matters

Skinny bundles are hard to define, though the boundaries seem to be between 20 and 60 channels for less than $40 a month.

Traditional TV providers aren’t sure what skinny bundles are either, but they are sure they need to be a part of them.

Getting into the base bundle is going to be very hard, leading to big battles between TV providers for a limited number of spaces.

*In my market, near San Francisco the Access Slim package is priced at $39.99, including local ABC, NBC, CBS and Fox channels.

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