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What is a Virtual Multichannel Video Programming Distributor (vMVPD)?

What is a Virtual Multichannel Video Programming Distributor

Posted on October 30th, 2017 by Lisa Hagin

By Gregg Brown, Senior Director, Global Digital Products, Encompass Digital Media Have you ever wondered – what is a Skinny Bundle? Is it similar to a Skinny Margarita? What is a Virtual Multichannel Video Programming Distributor (vMVPD)? How do these terms and services impact content owners, and what does it take to be successful?

Virtual Multichannel Video Programming Distributors Defined

Virtual Multichannel Video Programming Distributors aggregate live and on-demand linear television but deliver the content over the internet. vMVPDs offer content owners a path to reach OTT users who have cut the cord or are cord-nevers, without taking on the risk of going direct. Examples of some vMVPDs include: 
  • Sling
  • DIRECTV NOW
  • PlayStation™ Vue
  • YouTube Live
  • Hulu Live
  • fuboTV
These companies (and more) aggregate content from providers and distribute it directly to consumers via internet-connected devices, most of which charge a subscription to access the content. Examples include: 
  • Roku
  • Apple TV
  • Amazon Fire TV
  • Gaming Consoles
  • Other iOS and Android devices
vMVPDs take responsibility for providing billing and customer support.

What is the Skinny on the Skinny Bundle? 

Virtual Multichannel Video Programming Distributors started making noise in the industry when Sling launched in 2015. From a consumer’s point of view, one of the main selling points is the skinny bundle.   A skinny bundle is a more targeted amount of channels available to consumers to purchase at a reduced price vs. what they pay for traditional cable TV. These basic bundles are aimed at being cheaper than your traditional cable package but offer enough value that the consumer does not have to purchase individual over-the-top (OTT) apps directly from each content provider.   OTT Content Aggregators are types of vMVPDs that are successful at capturing subscribers because they appeal to millennials and others seeking an alternative to the traditional pay TV model.   Per comScore, over 3.1 million households subscribe to skinny bundles via vMVPDs. Sling, DIRECTV NOW and PlayStation Vue are the current market leaders in terms of subscriber and viewing times. This chart depicts the scale of the vMVPD viewership market in context of the overall digital video landscape as well as how much users are actually using the services. What is a Virtual Multichannel Video Programming Distributor   The differentiators of vMVPD offerings vary greatly by provider and the offerings are extremely inconsistent. Consumers naturally evaluate a vMVPD by looking at the channel line-up. Most aggregators provide a skinny bundle that has a base level of channels.   However, not all skinny bundles are created equal!  
  • Some have local channels, others don’t.
  • Others have local channels but don’t show live events.
  • There is even a permutation of some local channels, and then on-demand content only for others.
  • Most offer additional channels for incremental fees based on themes such as sports, entertainment, etc.  
The differentiations don’t stop at the channel line-up – next you have device availability. comScore states, outside of the traditional iOS and Android devices, the most used Connected TV devices, in order, are:
  1. Roku
  2. Amazon Fire TV
  3. Chromecast
  4. Apple TV
Given the wide spectrum and price points of devices, it is not shocking that some devices are not supported. However, what is surprising is that some don’t support the top device  – Roku, while others limit availability to a specific operating system like Android. DVR is another key differentiator in the space and the vMVPDs are in the nascent stages of developing DVR capabilities – a staple in the traditional Cable Operator space. Only a short list of Live OTT Content Aggregators offer DVR at this point and most of have limited functionality for the service.

What does vMVPD mean to Content Providers?

Content owners have three key options when it comes to live distribution of content – TVE leveraging their traditional MVPD, OTT Direct or OTT via vMVPDs. For OTT direct distribution, content owners must get into the business of billing, customer support, device management, direct marketing, unpredictable revenue streams along with churn, and the customer confusion between all of the options in the market not to mention all of the rights issues that have to be managed between Linear, TVE, and OTT. Are you capable of going to battle and handling this scope of work? Networks can focus on making great content and create another avenue to develop their digital content strategy. In many ways, vMVPDs may be the most attractive options for content providers, especially those that don’t have the resources to enter the OTT space alone. If a content provider decides to make the leap into vMVPD space, it still requires a highly savvy technology provider to work with to make it happen. Each Live OTT Content Aggregator has their own set of standards for signal acquisition, encoding specifications, creating ad inventory, etc.

How can Virtual Multichannel Video Programming Distributors be successful?

vMVPDs are fighting a battle against formidable incumbents on a daily basis. The competition has large, reliable network infrastructures and have been acquiring and marketing content for years.  To compete and win, it is critical that vMVPDs work with a service provider that has extensive experience delivering broadcast quality services and content over an IP-based backbone – including aggregating and acquiring live, linear, and on-demand content and delivering over the Internet. vMVPDs are here to stay and will only gain market share as consumers choose to move forward with the skinny bundle and watch more content on multi-screen devices.  Network stabilization, channel line up consistency, and feature parity will also make it easier for consumers to make the switch, especially as these services “Cross the Chasm.” To take advantage of this market maturation, it’s critical that both content providers and vMVPDs strongly consider working with technology providers that understand the market and can deliver what is required to make both successful. Encompass Digital Media is a market leader in the ability to capture, process and deliver video content anywhere, to any device on the planet. We provide managed services to 850+ channels, stream 3,000 hours of content daily, across 9 facilities on 4 continents. Contact us today to learn how our solutions benefit content providers and vMVPDs.

Posted in: TV and Video