Will High Prices Kill YouTube TV?

Will High Prices Kill YouTube TV?

July 14, 2020

July 14, 2020

YouTube TV hit its customers (and future customers?) with a massive $15 per month price increase this month. Now, many are questioning not only the efficacy of the cord-cutting concept but YouTube TV's future. Google's live TV streaming service will likely service, but there are a few things it should do to regain its competitive edge.

Streamer's Spotlight: YouTube TV's Price Increases Hurt, But Service Will Live

The major promise of the cord-cutting movement, starting with Sling TV and festooning outward from there, was the promise of lower-than-cable prices and more flexibility and choice. That promise still exists in some fashion with Sling TV and Philo, but those two services are not the top dogs in town anymore. That title goes to Hulu + Live TV and YouTube TV.

Although these services still maintain the no-contract offers that distinguish them from traditional cable, their price creep is closing in on traditional cable at an accelerated pace. Case in point: YouTube TV just raised its price from $49.99 per month, to $64.99 per month, making it one of the most expensive options on the cord-cutting market. (For comparison's sake, the service launched in 2018 at $35 per month).

There are two questions here:

  1. Why are these prices increases so much?

  2. Can YouTube TV (and other services like it) survive with cable-like prices?

Why Are Cord-Cutting Prices Rising?

Cord-cutting prices were initially low between 2015-2018. In fact, we wrote about

around 1 year ago. Consequently, we found that the price hikes really started taking off in 2017. And oddly enough, as more competition entered the market, prices started going up.

Yes, that's counter-intuitive to the economics of supply and demand, but there's another factor at play when it comes to live TV and on-demand streaming services.

Although there are now more services on the market, the number of licensing content providers has not increased. E.g., while the market now supports more services like YouTube TV, Hulu + Live TV, Sling TV, Vidgo, Philo, and others, they're all getting their channels from the same sources. There's more demand for licensed access to live TV over the web, giving Sinclair Broadcasting, Disney, and others far more marketing power to charge the streaming service providers more money for licensing agreements.

We're now paying more simply because so many of us are cutting the cord, all while YouTube TV, Sling TV, Philo, et. al., are forced to compete against each other for licensing agreements. The streaming services aren't going to eat that cost and stay viable, so they pass it on to us.

There's another reason we've seen prices increase, and that's because of channel package creep. YouTube TV, in particular, has been adding channels and dropping few. The more channels it offers, the pricier the package gets. And while we don't have an inside channel to their licensing agreements, you can be sure that those agreements demand they include a whole catalog of channels instead of just a few. More channels = higher prices.

This is the same trap that media companies have set for traditional cable TV providers, and they're slowly pushing it on cord-cutting services, as well.

Can YouTube TV Survive Higher Prices?

That's the biggest question we're struggling with right now. Last week, VentureBeat writer Emil Protalinski wrote an article titled "

". In it, he explains all the different services that people can still access that would cost less together than one month of YouTube TV. He concludes by saying he'll stick with just Netflix.

His analysis, and many like his, are problematic. The value proposition that YouTube TV and other services like it have is on sports as a primary feature and shareability. YouTube TV has one of the widest live sports packages to offer for cord-cutters, giving it a market edge. And it's still much cheaper with a larger package than the equivalent package from AT&T TV Now. In fact, its biggest threat right now is FuboTV, with that service's recent acquisition of ESPN.

YouTube TV can survive on the back of its sports package and its unique features that allow for 3 simultaneous streams, a 9-month unlimited cloud DVR, and 6 individual profile users per account. Even with FuboTV as a threat, as long as it continues offering something cheaper than traditional cable, with access to regional sports networks, national sports networks, local broadcast networks, and no contract, it'll have staying power.

This Week's Streaming Guide

1. 'The Busines of Drugs' Now Streaming on Netflix

A former CIA agent analyzes the economics of 6 illicit drugs to help understand how the business of drugs operates.

 

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2. Aldous Huxley's 'Brave New World' Premieres on Peacock

NBCUniversal's Peacock streaming service is here with a live-action adaptation of the classic dystopian novel,

Brave New World

. Watch starting July 15 (Wednesday). -

3. Conspiracy Thriller 'The Capture' Now Streaming on Peacock

Already landing a 95% rating on Rotten Tomatoes, catch this new thriller on Peacock. Live stream starting July 15. -

4. More Swords and Knives in 'Forged in Fire' Season 7

Returning from a hiatus, the hit blacksmith competition series Forged in Fire returns this Wednesday (July 15) at 9 PM on the History Channel. -

News and Industry Developments

1. Amazon Fire TV Now Pulls Live TV Content

The company added a "Live TV" section that integrates with Sling TV, Hulu + Live TV, and YouTube TV. -

2. Peacock May Not Have Roku, Amazon Fire TV Apps at Launch

There are some sticking points about data sharing and advertising that may keep the apps from becoming available at launch. -

3. Quibi Lost 90% of Users After Free Trial

The pain keeps coming from the embattled streaming service. -

4. Television Bundles Are Raising Prices and Ruining Cord-Cutting

Bundles are the bane of the cord-cutters existence right now. -

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