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The Rise of the Virtual Multichannel Video Programming Distributor

Ed Wenck | Apr 29, 2021

 

The acronym “vMVPD” is a bit unwieldy, but what it means – “virtual multichannel video programming distributor” – is another element of the rapidly changing face of content delivery to the masses. These streaming services and “skinny bundles” are aimed directly at serving the growing number of cord-cutters. As Elizabeth Parks of Parks Associates notes: “We’re watching the great und-bundling and re-bundling of content channels.”

Paul Erickson, a senior analyst at Parks, noted in a recent online presentation titled “Evolution of vMVPDs: Finding Success” that, “Subscribers of these services are growing, and by 2023, they’ll be second only to cable. Price is the biggest driver for adoption, but content is the other one: ‘Does this service have what I want to watch?’”

Shane Cannon, President of Vidgo, notes that his service (which started by offering shows for the Spanish-speaking/bilingual audience), says that his platform can stay inexpensive. “We rely on advertising dollars, not subscriptions.” And when subscriptions do come into play, a number of providers are doing away with long contracts, including Vidgo. “Our clients can pay cash for the service on a monthly basis,” notes Cannon. It’s a strategy that Nic Wilson, head of customer success at Tivo, endorses: “Find a niche, and be the best at it.” (It’s working for Vidgo – they’re currently seeing 700% growth every month.)

Cannon doesn’t see a service such as Netflix as a competitor. “We rely on a lot of sports content – so a Netflix is going to be more of a complement.” (And sports content is facing its own set of disruptions – Elizabeth Parks notes that Amazon’s deal with the NFL is going to throw a wrench in a great many football junkies’ subscription plans.)

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Carolyn Ferreira, head of customer acquisition at Philo, serves a different demo: no news, no sports. And for that demo, they have a singular focus on Philo’s core competencies. They are, says Ferreira, “Best-in-class tech and the best possible customer service experience.” Every employee at Philo is required to do a “ride along” – answering the phone, walking customers through setup, troubleshooting, offering support, and so on.

All of these niche OTT services have done something interesting when it comes to consumer perception. “Suddenly having a cable service has become kind of a scarlet letter. Do you know anyone who openly admits they’re still a cable subscriber if the topic comes up at a party?” asks Michael Ribero, VP of global marketing, for Paramount+/ViacomCBS. But all of these vMVPDs can easily be doomed by reasons beyond unrelated to costs. “They love you until the game they’re watching starts to buffer, and then they hate you. Don’t give them a reason to leave.” But when they do (the dropping and adding of customers is called “churn” in this biz), it’s not always about the delivery. “We need to rethink the concept of churn – for our business, it’s pretty high year-over-year. But it’s not always permanent – think about the football fan who returns to a service every August.”

As the vMVPD universe expands – with niche services, skinny bundles, and OTT options expanding into the hundreds – it once again points up a concept that CEDIA’s Walt Zerbe and his compadres on the Tech Council (especially folks like Mike Heiss) have been talking about for the last several years: the notion of a “content concierge.” “If you know what they want to watch, the platform that has what they want to watch, and the device they need to watch it, you’ll be a hero,” says Heiss.

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