Somewhat lost in the shocking news of T-Mobile mercy-killing its virtual MVPD just five months after launch is the significant opportunity it presents for Philo.
Of course YouTube TV, which is already a preferred third-party streaming TV option for Verizon, stands to gain from being subbed in for TVision Live. Based on estimates, YouTube TV ended the fourth quarter with 3.5 million subscribers and a T-Mobile partnership should help maintain momentum.
But for Philo, the T-Mobile partnership serves as vindication of its business model and proves that it’s not as easy as it looks.
Philo launched in late 2017 with backing from A+E, AMC Networks, Discovery and Viacom. It has managed to keep its monthly price mostly steady by focusing on entertainment channels and avoiding live sports and broadcast television. The service costs $20 per month at a time when its competitors like Hulu + Live TV, YouTube TV and fuboTV – under pressure from rising programming costs – have had to raise their core package rates to $65 per month.
When T-Mobile announced TVision Vibe, a $10 per month package with a similar general entertainment focus, it looked a little like the Un-carrier was trying to steal Philo’s thunder. Despite key differences like limited availability, DVR charges and a smaller channel lineup, it was a similar product at half the price.
Within days of launching, though, TVision’s service tiers including Vibe came under fire from programmers. Discovery CEO David Zaslav came right out and said that T-Mobile didn’t have the right to sell his company’s channels as they were packaged. Sources suggested that ViacomCBS and NBCUniversal were also concerned.
T-Mobile found a quick fix last year by attaching the TVision Vibe channels to its TVision Live package, effectively pulling back from its $10 per month skinny bundle aspirations. And now, TVision Vibe will soon be gone all together, replaced by Philo.
"We’re so thrilled to partner with T-Mobile. Both companies are united by a similar mission —we’re committed to always putting our customers first. This partnership with T-Mobile takes Philo’s amazing value to another level. With T-Mobile’s leading 5G network and expansive customer base, this partnership will provide a massive boost to our shared vision of reinventing television by creating an experience people love as much as the shows they watch,” said Philo CEO Andrew McCollum in a statement.
Philo had 800,000 subscribers at last count in November, growing 300% year over year. If the service maintains that growth rate, it will likely crack one million before too long. Deals like the T-Mobile agreement will help it get there while also serving to validate Philo’s strategy.