Wolk: T-Mobile’s Surrender Is a Landmark Defeat for Traditional Pay TV

(Image credit: T-Mobile)

In years to come, T-Mobile’s decision to shut down its Tvision linear TV service just five months after launch may be cited as the canary in the coal mine, signaling an even more rapid decline for traditional linear pay TV than we’ve come to expect.

Alan Wolk

(Image credit: Alan Wolk)

Yes, there were problems--T-Mobile somehow forgot to ask companies like Discovery if it could put their various networks on the lower priced version of the app (something even the most junior lawyer should have flagged for them.) MobiTV, who built the underlying platform for the app, went bankrupt last month, which did not help much, either.  

So much for that $325 million Layer 3 purchase.

And of course 5G, or fixed 5G to the home to be exact, the original raison d’etre behind TVision, has yet to materialize in a major way and probably won’t any time in the foreseeable future.

But mostly, the reason TVision failed is that nobody needs yet another full on linear pay TV service, virtual or otherwise.

With nine multi-billion-dollar Flixes up and running, along with about as many FASTs and dozens of niche services, consumers are figuring out that there’s more and better programming on streaming than on traditional cable … all for considerably less money. 

So the push is going to be to move away from traditional pay TV, not towards it.

That said, there are several things still keeping consumers from making that move.

The first is inertia: while many viewers are indeed unhappy with their current pay TV packages, many are not. All the talk about the “massive wave of cord cutting” causes us to forget that something like 75% of U.S. households still subscribe to pay TV.  While that’s not nearly as many as subscribed five years ago, it’s still nothing close to a “massive wave” and many of those viewers are quite happy with what they’ve got.

That satisfaction is in no small part due to some smart moves on the part of their providers: companies like Comcast have integrated Netflix—and most recently, Disney Plus—into the main menu of their program guides,  so consumers don’t have to go “off premises” to watch them, lulling them into complacency.

That said, inertia can only take you so far. And as production picks back up, and the buzz about what to watch increasingly becomes about what’s on streaming, viewers who were previously thrilled to have hundreds of cable channels to click through are going to be feeling major FOMO about all those streaming channels they don’t have.

Then there’s news and sports.

RIght now, there’s no real way to watch CNN unless you have a pay TV subscription. Yes, many of the FASTs have a CNN channel with fairly recent clips on it, but it’s not the live version.

Tubi and Amazon have both been working to curate news offerings--both have gone heavy on local news by working with players like Hearst and Tegna. And apps like Haystack also offer local news, but it’s not the full four affiliate local news play that many viewers, older viewers in particular, are used to.

That should change over the next year or two as more local broadcasters make the move to streaming, at least for their news channels, and AT&T finds a buyer for CNN who can then figure out streaming distribution. (As for the other national cable players, Fox has an outlet in Tubi and MSNBC has one in Peacock. But oddly enough, only Paramount Plus, which has the CBSN national feed and local affiliate feeds has been actively promoting their national news chops.)

Sports is an even bigger hurdle, at least for now, and the result is that sports fans are reluctant to cut their ties with cable lest they be left unable to watch their favorite teams.

That is changing though, slowly but surely.

The NFL’s new 11-year deal gave Thursday night rights to Amazon and allows NBC, CBS and ABC to stream the games they have the rights to, even the Super Bowl. So Peacock, Paramount Plus and ESPN Plus are in luck.

That still leaves RSN (regional sports network) fans who may have some salvation coming next year when Ballys and Sinclair launch apps for the former Fox RSNs, which, thanks to the Ballys sponsorship, should be fairly reasonably priced. But that’s just 19 markets, not the whole country, so a lot of fans will still be tied to cable. For now, anyway.

Which brings us back to T-Mobile and TVision.

T-Mobile likely gave up on TVision because they realized there wasn’t a market for a full-bore pay TV service anymore. That after a nice run-up, the vMVPDs had sort of stalled out; they were the nicotine patches of the pay TV world, the fix that viewers needed before they fully weaned themselves off the 500 channel universe. (It’s not just coincidence that two of the most successful vMVPDs offer close to 100 channels each.) 

T-Mobile probably also realizes that if anyone was going to try giving up pay TV, it was the people paying for it monthly, not the ones with the two-year, triple-play deals.

Which is not to say that pay TV is going to implode tomorrow. Or even next year or three years from now. Just that T-Mobile’s surrender is TV’s Stalingrad, the moment the tide turned inexorably in the opposite direction.

Alan Wolk

Alan Wolk is the co-founder and lead analyst for media consultancy TV[R]EV