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Philo has entered the streaming TV market with much fanfare and the halo of a former Facebook founder at the helm. It offers a “skinny bundle” of thirty-five cable channels for the industry-low price of $16 per month. Sounds exactly like what cord-cutters have been asking for, right? Look beneath the surface, though, and you’ll be left wondering who Philo’s customers really are.
A Quick Introduction to Philo
Philo launched with the framework for a complete streaming solution. Its channel lineup consists of b-list cable channels and a few, like AMC, that break into the ratings top ten lists from time to time. Philo’s feature set covers all the bases with simultaneous streaming, flexible live TV, and on-demand options. Much like YouTube TV’s mobile-centric approach, however, Philo expects its users to watch on computers and mobile devices. Roku is the only option for connecting to a television.
Channels and Plans
Media companies A+E, AMC, Discovery, Scripps, and Viacom cut a deal with Philo to package their cable channels into a single service. For the baseline $16-per-month subscription, you get live and on-demand streaming from thirty-five channels, including:
A&E, AMC, Animal Planet, AXS TV, BBC America, BBC World News, BET, Cheddar, CMT, Comedy Central, Discovery, diy, Food Network, fyi, GSN, History, IFC, ID, Lifetime, MTV, MTV2, Nick, Nick Jr., OWN, Sci, Spike, Sundance, Teen Nick, TLC, Travel, TV Land, Velocity, VH1, Viceland, WE
For an extra $4 per month, you can expand the Philo lineup to include AHC, ET-Her, Cooking Channel, Destination America, Discovery Family, Discovery Life, Logo, MTV Live, and Nicktoons.
Unlike every other streaming service provider, Philo does not require a credit card to register for its free trial. All it asks for is your mobile phone number. At the end of the seven-day trial, Philo will contact you to get your payment information.
Devices and Features
Philo subscribers can watch up to three simultaneous streams through a Windows or Mac browser, iOS or Android mobile devices. The only way to connect Philo to a television, however, is through a Roku streaming device. Given that most people, including Millennials, spend significantly more time watching TV on a television, this is the weakest aspect of Philo’s feature set.
DVR features let users pause, rewind, fast forward and save live TV. There is no limit on the number of shows that users can save, but recordings will disappear after thirty days. A Look Back feature keeps programs available to stream for 72 hours after broadcast.
The Business Strategies VC’s Want
Much of the media coverage surrounding Philo’s launch focused on its no-sports strategy. There’s a solid business logic that makes the approach sound good when briefing investors. Skipping sports makes the service profitable.
The sports networks charge cable companies and streaming services high fees for the privilege of carrying their content. Viacom CEO Robert Bakish told Ad Week earlier this year that $40-per-month skinny bundles that include broadcast and sports networks “are not economic on a sustainable basis today.” Going with a no-broadcast, no-sports channel lineup could let a service like Philo make a profit even with a $16 monthly rate.
None of the Channels You Want
The trouble is, Philo’s channels are not the ones people want to watch. Deadline reported that the most popular networks during the 2016-2017 TV season were ABC, CBS, FOX, NBC and The CW. Those networks’ popularity extends beyond sports. Entertainment, national news and local news are just as important as ever to today’s TV-watchers.
People subscribe to cable TV, and increasingly to streaming services like YouTube TV and DirecTV Now, to get these networks and the dozen or so cable channels with shows they like. Their frustrations with high cable prices stem from all of the channels they pay for but never watch. The channels in Philo’s lineup are just as likely to make people’s who-cares list as the cable sports networks.
Worth Keeping an Eye On, Is It Worth Watching?
Once you see the limited scope of Philo’s service, you have to wonder who its customers are. You can’t get local TV programming – or even on-demand content – from the most popular networks. You can’t watch Philo’s service on a television set unless you’re among the 5%-10% of American households that have a Roku device.
So who could it be for? The small subset of Millennials who only watch video on their phones, don’t care about sports, don’t care about broadcast content, but do care enough to pay for second-tier cable channels?
It will be interesting to watch Philo, not so much for its content, but for what it might signal about the future of TV. Philo’s limited lineup may be profitable no matter how few customers it gets.