Existing TV players are still too powerful, and they want too much.
YouTube announced its new cable-style streaming TV service, known simply as YouTube TV, to considerable fanfare on Tuesday. But as a rival to regular television, it has some significant holes, and that says a lot about the TV business right now.
For some cord-cutters who don’t watch a lot of regular television—especially sports—YouTube TV might seem like a pretty great deal at $35 a month. It has 40 or so channels of broadcast and cable TV, including NBC, ABC, the USA Network and Fox. ESPN is also a part of the bundle.
On top of all that, you get all of YouTube, including the original content that is part of the recently launched $9.99 per month YouTube Red service, and you get Google Play Music for free. Plus YouTube gives you an unlimited “cloud DVR,” so you can save shows to watch later.
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Plenty of cord-cutters or those who have never signed up for cable are likely to be satisfied. But there are some large gaps. For example, there’s nothing from Viacom, or Time Warner—no CNN or Discovery Channel, no TBS, and no TNT (YouTube is still in discussions with other partners).
In addition to those holes, the YouTube TV service is only available in markets where its existing cable partners have affiliates. So if you live in or near a number of major U.S. urban centers, you won’t be able to subscribe even if you want to.
All of these caveats make YouTube’s service look a lot less like a cable-TV killer and a lot more like just a digital version of a not-so-great cable package.
So why do those restrictions exist? Why doesn’t YouTube offer the entire universe of cable and broadcast TV content, plus movies and local sports and so on, for $35? The short answer is because it can’t—at least, not unless it is willing to lose billions of dollars, and probably not even then. Existing TV players have too much power.
As Jan Dawson of Jackdaw Research put it in a post, “the US TV market continues to be incredibly resistant to real disruption – every over the top streaming alternative to traditional pay TV is handicapped in at least one way, and often several.”
In fact, Dawson notes that there’s a significant irony in the fact that services like YouTube TV are supposed to be so disruptive, but “they actually offer even less choice individually in many cases than the pay TV services they’re aiming to replace.”
One of the reasons why the YouTube service has been in the works for so long—it was first mentioned in 2012, as a Google cable-TV killer—is that the tech giant has had a hard time getting cable and broadcast companies to sign on, especially for a price that would make a $35-per-month bundle cost-effective for Google to offer.
Apple was also reportedly working on a similar cable-TV alternative for years, but it ran into the same problems. Content companies and networks wanted too much money to hand over their shows, and some didn’t want to play ball at all.
In part, that’s because existing TV players see a Google or Apple bundle as the beginning of the end for them and their brands, and for the access to viewers that allows them to charge obscene sums of money for advertising—not to mention their ability to sign multi-billion-dollar deals for the rights to sporting events.
Companies like Disney and CBS and Viacom know they must participate in streaming somehow, but they continue to want to control it themselves. So they are launching their own services (like Comcast’s Watchable), and those that have a stake in Hulu are participating in that company’s streaming video roll-out, which is expected soon.
In the meantime, these traditional TV players are asking Google and Apple and other would-be cable competitors (Amazon has also reportedly looked at launching a similar streaming service) for huge sums to license some of their content, but also trying to keep some.
The result is a hodgepodge of services like Sony’s PlayStation Vue, Sling TV and YouTube TV, each of which isn’t quite enough on its own to be an effective substitute for cable. And so existing media and entertainment companies are essentially shooting themselves in the foot even as they try to run towards the future—and so is YouTube.