Research: DFW sports bundle set to dent pay-TV subs
May 15, 2024
Research from Aluma Insights finds that pay-TV subscribers are far more inclined than non-subscribers to sign up for the Disney/ESPN, Fox and Warner Bros Discovery (DFW) sports bundle when it launches. One-in-five US pay-TV subscribers are at least moderately inclined to sign up for the DFW bundle, double the rate of those without pay TV.
Among those likely to sign up for the DFW bundle, 39 per cent are at least moderately likely to cancel their pay-TV service as a result. And MVPDs are taking notice.
“A loss of even 10 per cent of the already-declining base of MVPD subscribers would severely diminish the ability of operators to stay afloat,” commented Michael Greeson, principal analyst at Aluma. “And if those launching the DFW bundle intend to rely on pull from those without pay-TV, they can forget about it. Only 9 per cent are legitimate prospects for the service.”
While these complaints are almost as old as pay-TV itself, Fubo chose to litigate them now because the DFW bundle is poised to launch this summer.
“If the Department of Justice does not enjoin the DFW venture or level the playing field for Fubo to license their content at rates larger operators enjoy, Fubo could lose as much as 10 per cent to 15 per cent of its subscriber base by summer 2025. If the Department of Justice does not enjoin the DFW venture or level the playing field for Fubo to license their content at rates larger operators enjoy,” added Greeson. “Fubo could lose as much as 10 per cent to 15 per cent of its subscriber base by summer 2025.”
One factor that could constrain uptake of the new bundle is price. At the moment, there is a modest consensus it will launch at $50 a month. If it does, it would lessen its disruptive potential. Aluma’s research found that only 11 per cent of decision-makers are at least moderately likely to sign up for the bundle at $49.99 per month, half the demand at $29.99 a month.
One thing is for sure: all parties in the home video value chain and the financial community will be watching how the Department of Justice decides the Fubo case. If Disney, Fox and WBD are allowed to launch their bundle as currently conceived, it could open the gates for a wave of intra-network D2C bundles that privilege a network’s own services over their pay-TV ‘partners’.
Aluma points out, however, 30 per cent of viewers had no opinion about the content trade-off, meaning a significant part of the jury is still out, poised to go negative if the quality of already lower-value content further declined. Thus, free TV streaming providers should think carefully before adding additional ad minutes to current loads, and instead look to improve the ad-viewing experience by, for example, reducing the frequency of repetitive ads.