Sony has come out of the shadows to become one of the hot favorites in the race to dominate US OTT video services. It must have spent a fortune in payments and promises to land the 85 channels that make up the service, and there are 50 channels in the $50 entry package. A subscription comes with a 7 days free trial and cancellation within 30 days, with no longer time commitment.
But it is a bold move, one that aims fairly and squarely at replacing cable, not living alongside it. Many of the early OTT services have been less ambitious, such as Sling TV which aims to pick up the odd “lost” millennial in a $20 package, and channels such as CBS and HBO which plan to go straight to the consumer, simply to ensure they are getting their fair share of the market. Each of them pretend at last that cord cutting won’t be exacerbated by their behavior, although collectively they will clearly have an effect. But Sony is the first to go for the jugular in what most people have been assuming will be a weak service with a poor response.
And so have we. Because Sony has been unable to do anything right since 2004. It has managed to stabilize its music business, it is fine at banking in Japan, but the bulk of its businesses, consumer electronics, gaming and phones have been on a downward spiral for over a decade. And it was forced to sell its PC business. The two conspicuous successes have been Sony Pictures and its continued leadership of the camera market.
There have been comments over the past month or so, from people in the know, suggesting that Sony Vue would go this route, but now it’s in the public domain. In every other case, customers could easily afford to keep their pay TV package, or most of it, and also try out an OTT service – especially those which they can walk away from after a tryout – and this tiptoeing into the water approach is perhaps the right way of working, but Sony doesn’t think so. It has thrown everything at its Vue offering and lined up national broadcast networks CBS, Fox, NBC, as well as Discovery, Scripps, Turner, Viacom, and AMC. The only thing that most pundits think is missing is ABC and the rest of the Disney packages.
From Sony’s point of view, what it is trying to achieve is different. PlayStation users are its first target, because of their high loyalty to Sony, and these are (or were) typically young and male. Many have grown into adulthood maintaining their PlayStation credentials, if perhaps somewhat more quietly. This means Sony is shooting at an initially far smaller group of people and wants a larger slice of the pie as a result. Many of these people overlap with cord nevers, people who have never been a client for pay TV, and see $135 a month (Comcast average revenue per user) as too expensive for them to buy into one of the pay TV operators. So less than half as much to get all of what their parents paid for, and on their favorite device, which they already know how to work, makes sense to Sony.
Whether that makes sense in the long run when Sony inevitably puts this on other devices, we will have to wait to find out. It will be up against lower priced entry points, and each of these will only be part of the solution adopted in any one home, and that may make for more granular purchasing decisions, which give consumers some comfort and a certain level of a la carte channel selection – or if not actual a la carte, then at least smaller bundles.
Out of the gate, Vue is available in New York, Chicago and Philadelphia on PS3 and PS4 gaming consoles.
The offering comes from Andrew House, president and Global CEO or Sony Computer Entertainment, and he has been a sure hand within Sony, rising to the post of chief marketing officer for the entire company when it was run by Howard Stringer, although he has spent most of his time in PlayStation and also led the recent launch of the PS4.
“The TV experience needs a revolution and PlayStation Vue changes the rules by embracing how today’s viewers want to discover and enjoy content,” said House at the launch.
House listed the new features of PlayStation Vue including live TV, personalization, a cloud DVR with automatic 28 day, one click recording, and discovery – focused on search and guide features and finally the right content. We’re pretty sure there will be hands on articles on this in a few days.
The Access package costs $50 a month, and what Sony calls its Core package is $60 and adds regional sports networks, including the new SportNet channels from Comcast (but not ESPN) and the Elite package costs $70 and adds 25 lifestyle, music and family channels.
Additional markets will launch later this year and PlayStation Vue will shift to iPad and other popular devices in the near future.
The problem with Vue is that there are so many ways for Sony to fail. It may find that the loyalty its PlayStation customers have does not extend to putting $600 a year into its coffers, and that gamers prefer less TV, not more. And even if it harvests these in great number there are only 110 million PlayStation Network accounts in the world, and PS4 has shipped just 20 million devices, PS3 some 80+ million. If around a third of these are in the US, that makes 33 to 35 million homes, the total Sony US universe.
It will have to have success in this heartland and we suspect it will, but what will success look like? 10% penetration after a year? So 3.5 million customers in 12 months? Well, yes if the service was already US wide, but given that it is in an area with no more than 10% of the US population (if you take the wider metropolitan populations of all three cities) that makes success closer to 350,000 sales in a year.
So Sony needs to both widen this initial area and make that all important transition to the non-Sony world, and especially Apple devices – if Apple allows Sony to sell such an app? If so, this secondary stage of sales could be driven by PS4 fanboys spouting off about how wonderful the experience is. But whoever listens to a PS4 game console hound?
The wider belief will be that Sony has bitten off more than it can chew and that leaping to a version of TV that is very similar to cable, but over the internet, may be the wrong solution. We always talk about disruptive innovation being something that is half as good for a tenth of the price. Sony is betting that it can achieve the same thing with something slightly better for half of the price. Unchartered territory.