Viacom CEO Bob Bakish said the company is in “very advanced discussions” on creating a streaming package of entertainment channels that would be available to consumers for between $10 and $20 a month.
Speaking Monday at the J.P. Morgan Global Technology, Media and Telecom Conference, Bakish said the creation of an entertainment pack of channels “would be a very exciting development in the marketplace and that’s a very positive development for Viacom because when you look at our services, we still today have the largest share of viewing on pay TV on every demographic that we serve.”
Given the way Viacom’s networks are priced, they could be included in a bundle with “a few of our competitors and still be offered at this very low price point," he said, adding that he expected these entertainment packs to come to market this calendar year.
Viacom so far has been left out of many of the streaming bundles that have been rolled out that include the broadcast networks, their cable cousins and sports services.
Bakish said that collection of networks at the $40 price point they’ve been targeting won’t help bring consumers into the pay-TV ecosystem. At the same time, those bundles are unlikely to be profitable, he said.
The $40 bundles are “highly unlikely to bring in a cord never millennial,” he said. “They may cause someone to churn down in terms of price, although if you’re a real sports fan you probably want the big bundle because it has a lot of other sports bells and whistles.”
He added that at $40 a month "that tier is not really economically sustainable.”
“In talking to the people that run those companies, they say thing like ‘very difficult to make money here,’ which is code for losing money on a variable basis. One of those guys that are priced at $40 has a product cost of $46. So again, it’s unclear how long that gets sustained,” he said.
“The transformational opportunity is to really bring in a new entry segment at a much lower price point designed to be a path to bring someone in that wants high-quality entertainment at a low price, and ultimately be a tier that people can trade up from and trade down to as the household needs change,” he said.
He added that the current segment of the pay-TV business, people who pay $100 plus for big bundles, will probably be smaller than it is now, but it’s definitely going to be significant.
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