The latest buzz out of El Segundo, CA (DIRECTV’s HQ) is they’re ready to launch a new, Netflix-like service by year’s end. Coined “Ya Veo” (I can see), it’s an over-the-top (OTT) service primarily targeted towards the Latino demographic. OTT refers to the cord-cutting trend (Hulu, Netflix, etc) that streams specialized AND inexpensive programming over the internet. By inexpensive, we’re talking under $10/mo. Now, that’s obviously quite a bit less than typical satellite and cable plans, so it’ll be interesting to see how this plays out. Here are just a few of the factors in play…
A bit more on over-the-top and non-pay
At last check, about 20% of all households in the U.S. don’t pay for traditional TV (cable, satellite, Uverse, etc). A good chunk of those folks have gone the OTT route: Netflix, Hulu, Amazon Prime, Vudu, etc. Most of those services run less than $10/mo. For the most part, the main drawbacks are lack of scope of programming (you don’t get hundreds of channels) and no live TV, particularly sports and local news. At the same time, $10/mo is tough to beat, so it really all comes down to budget.
The other non-pay group (which is often a complement to the first) consists of over-the-air programming. Forget the rabbit ears of the 80s, we’re talking powerful, advanced antennas that capture free signals in the air and deliver them to your TV in high def. The biggest attractions here are the nationally broadcast channels: NBC, ABC, CBS and Fox. Total investment consists of the antenna ($25-$300) and that’s really about it. The main caveat is you HAVE to be near a broadcast tower. The closer, the better the signal and the more channels you’ll get…upwards of 50 channels is certainly possible.
Both of these cutting-the-cord options are on the rise…and while their market share is still relatively small, they’ve definitely caught the eye of the traditional pay industry. That gets us back to Ya Veo’s launch…
DIRECTV is new to the OTT game
Anytime a company heads into a new market, it’s a discovery process – public demand and pricing power and still relative unknowns. Netflix is a success primarily due to its $8.99/mo price tag. And while we still don’t know all the details surrounding the Ya Veo launch, the assumption is it’ll stream all-Spanish channels such as Univision. The biggest potential upsides here are usability and access. There are still plenty of areas in the U.S. that don’t have – or allow – access to satellite TV. A setup that streams programs via the internet opens up plenty of possibilities. Once a subscriber has, for example, Ya Veo, DIRECTV could offer access to more premium programming via a dedicated box or partnership with an existing system like Roku. For example, for an additional cost, you might be able to add the NFL Sunday Ticket™ or HBO in a click of a button. Overall, it’s a pretty safe bet that nothing’s set in stone right now. Ya Veo is very much a test program (smart to go after a niche FIRST and work out the kinks in relative obscurity).
In the long run, OTT and Ya Veo are really an entree to DIRECTV’s vast programming library. If/when it proves sustainable, I can envision DIRECTV producing their own Roku-like unit that lets you stream OTT via your TV. At that point, it’s basically programming a la carte. Get what you want, when you want, all at a significant savings. Mix in Netflix access (which ~30% of DIRECTV subscribers already have) and you could have a great solution for those folks who don’t currently get satellite. Either way, when Ya Veo launches later this year, it should make for an interesting addition to DIRECTV and the industry as a whole.