Did Subscription Internet Video Competition Just Get a Death Blow?

Media

Published: October 6, 2014 2:19 pm

Last Updated: April 27, 2020 8:13 pm

There’s been a lot of talk in recent weeks related to offering pay-TV packages that give customers more of what they want for less money. One of the main forces behind this chatter has been Sony Corp. (NYSE: SNE) which signed a deal last month with Viacom Inc. (NASDAQ: VIAB) that gave Sony the right to carry 22 Viacom networks on its proposed Internet on-demand video subscription (over-the-top, or OTT) programming package.

The expectation (hope?) that Sony would put together a package that cost less than a pay-TV subscription has apparently evaporated. The New York Post is reporting that Sony is preparing to release its subscription video on-demand Internet service by the end of the year at a price of up to $80 a month. Another source told the Post that the price would be competitive with a basic cable package that costs $60 to $65 a month. A source told the Post:

[Sony] had huge ambitions of breaking up the bundle and being the champion of the consumer, but they’ve had no success in doing that and they’re licking their wounds. They got creamed in negotiations.

Dish Network Corp. (NASDAQ: DISH) is also working on a package that many observers expect to be priced at around $30 a month, about the level that was expected from Sony. Verizon Communications Inc. (NYSE: VZ) bought the OTT service OnCue from Intel Corp. (NASDAQ: INTC) earlier this year and said it plans to offer OTT programming as early as the middle of next year. AT&T Inc. (NYSE: T) has said that it would bundle the DirecTV (NASDAQ: DTV) satellite pay-TV service with a fixed broadband wireless service for rural customers if the proposed merger between the companies is approved.

If the Post is right about Sony’s pricing scheme, none of these plans will make much difference in the current pay-TV landscape, which, of course, is just what the cable companies want: limited competition and high rents.

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