November 3, 2022 | Michael Greeson | Principal Analyst
I first argued in 2018 that super aggregators were the future of SVOD; there were simply too many apps—each with their own log-in, interface, customer service, walled-off content, etc.—for customers to pleasantly navigate, search, and use all of it. Yes, we all love expanded choice, but it comes with a paradox of its own.
The best super-aggregator candidates at the time were Amazon (the first premium channel store), Roku (who launched its channel store a year earlier), Apple (whose original Apple TV app provided an entry point), and MSOs such as Comcast (whose Flex platform would launch a year later). Each brand had the reach and brand cache to build what I called at the time Pay TV 3.0—that is, the application of the multi-channel pay-TV model to streaming. I began testing that notion in 2015, including the viability of short-term contracts, and it has always appealed to a majority of SVOD buyers. (For reference, pay-TV 1.0 is comprised of legacy MVPDs, 2.0 virtual MVPDs, and 3.0 the amalgam of SVODs with key elements of the MVPD model.)
Flash forward four years and, unfortunately, there has been little progress on the 3.0 front. Yes, bits and pieces are in place. For example, Prime Channels has long provided unified billing for its channel buyers. Otherwise, however, the vision remains largely unfulfilled. While we continue to believe this model is inevitable, it will be several years before such inter-network partnerships evolve from rumors to reality. Then again, perhaps I’m underestimating how comfortable users are with walled-garden content. Perhaps they prefer search customized to each service versus an all-in-one-bucket approach. Perhaps they are fine with 4-5 different SVOD charges hitting their account each month—they’re automated, after all, so how much pain can there be? And perhaps SVOD providers are (too) comfortable with this model, as it provided for a decade a gravy train for the largest providers.
It is in this context that Alphabet’s YouTube launched its version yet another non-3.0 channel store. Branded “Primetime Channels, it features 34 SVOD services, though many of the big hitters (e.g., Netflix, HBO Max) are not in the game. This is hardly unique to Primetime Channels, as it has been a bane for most new channel stores. Good news is that the issue is usually resolved within a year or two.
Unfortunately, my experience with Primetime Channels was much the same as other channel stores. Then again, I’m not the audience for it. With 2 billion social video users, more than 200 million in the US, YouTube offers SVOD providers an immense pool of prospective buyers. The co-watching potential is immense, as one’s YouTube social network is accessible via the same interface. As well, Primetime integrates into its interface YouTube videos relevant to the program you’re watching, including both professional and amateur content. For its target audience, this offers an entirely different experience that, say, Amazon Channels.
Unfortunately, when it comes to 3.0 elements, YouTube’s channel store is much like its predecessors. Perhaps Alphabet’s entrance into the space will spur others to differentiate via 3.0 features. Then again, perhaps that’s exactly where YouTube is headed.