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1 April 2021

A message to Mike Sievert – stop kicking TVision, it’s already dead

T-Mobile USA’s TVision Vibe and TVision Live OTT services have been sentenced to death, but the TVision Hub HDMI dongle has been granted a stay of execution. The dongle will now house Google’s YouTube TV and Philo’s namesake vMVPD services, sold under the TVision umbrella brand.

While T-Mobile CEO Mike Sievert has attempted some humility along the lines of “this shift may surprise some given last year’s TVision streaming services launch” – he can scratch Faultline’s name off that list of surprised parties. From the moment Sievert slipped into the CEO position vacated by John Legere in late 2019, we called the end of TMO’s in-house TV plans.

Vibe and Live signaled a final throw of the TVision dice, which ended up skimming across the table and crashing onto the floor, just five months after launch, while packaging up YouTube TV and Philo hardly counts as a throw at all – but instead a return to T-Mobile’s aggregator model at which it has been much more successful. We just wish T-Mobile would put the TVision brand out of its misery.

Rumors put TVision at around 100,000 subscribers, which isn’t bad for a fledgling service, from a revenue perspective. However, on a cost and maintenance appraisal, the bankruptcy of a key partner may well have tipped the scales – prompting T-Mobile to jump ship.

That partner is MobiTV, and if T-Mobile had made a success of TVision, it might have been enough to pull MobiTV back from the edge. As it stands, it seems that T-Mobile has now decided to cut that cord, and migrate to providing just the dongle hardware, instead of a fully-fledged video service.

That does not bode well for MobiTV, the fortunes of which we examined in March. The key questions we had were what had happened to $200 million of investment, and whether the $15.5 million that was raised by its top customers was going to be enough to keep it afloat. We could not see a clear way out for MobiTV unless it had a fire sale – offloading the assets it had cultivated as it earned its stripes upgrading video delivery from traditional QAM to IP-based approaches, and blending in VoD, catch-up, nDVR, recommendations, and analytics.

T-Mobile does seem to be taking a sensible approach, being an aggregator that attempts to negotiate discounts to the ‘best’ OTT services on behalf of its mobile and home broadband customers.

Maintaining an Android TV dongle, as well as those service negotiations, sounds like much less of a logistical headache than running a complete video service, and there’s plenty of scope for T-Mobile to target cord-cutters too. Cross-marketing TVision to its mobile customers should rack up some easy sales, and plenty of those subscribers would consider switching their home broadband services to a fixed-wireless alternative.

Thankfully, for T-Mobile, the TVision project shouldn’t have cost it as much as its other video-related endeavor. Back in 2018, it acquired Layer3 TV for some $325 million, which became the heart of a conventional pay TV package – TVision Home. That service was shut down in December 2020, and the Layer3 TV investment has been entirely written off on T-Mobile’s books.

Based on this, it appears that Faultline’s assertions are correct – that the OTT version of TVision would not include any of the Layer3 heritage. Now with the pivot to YouTube TV and Philo, it seems all but certain that the last bit of Layer3 has been stripped from the bones of T-Mobile’s slightly abortive pay TV endeavor.

Of course, $325 million is a pittance to a company that reported annual revenues of $68.4 billion in 2020 – some 0.48%. To that end, a quick and painful lesson with little financial ramification is preferable to buying a cable operator and trying to go the whole hog, especially given our recent number-crunching on the decline of the US pay TV market – to the tune of 6 million lost subs each year.

For Google, well, this seems like a homerun. T-Mobile knocked lumps out of Verizon and AT&T in the mobile market, and if it plans to do the same in broadband and pay TV, then the TVision dongle represents quite an expansionist opportunity for both Android TV and YouTube TV.

In the blog post that announced the news, CEO Sievert described the news as a big upgrade, as both YouTube TV and Philo tiers now have twice as many channels as TVision’s Live and Vibe predecessors. The same old shots are being fired by T-Mobile’s marketing arsenal, taking aim at the ‘cableopoly’ with promises that these services have “no cable box, no annual contracts, no exploding bills, and no hidden fees.”

That is a narrative that has legs in the US. Cable companies have been very unpopular among customers and the wider public for some time now. Reinventing the video services via OTT systems, delivered over the cable broadband lines, would do much to quiet this discontent, and counter T-Mobile’s angle too.

April 29 is the cutoff date, and current TVision Vibe and Live subscribers are going to get their choice of new service free for a month, and then subject to a $10 discount on the monthly cost. YouTube and Philo start at $65 and $20 a month respectively, and this discount appears set for the duration of the customer’s relationship with T-Mobile.

As you can see, Philo is being pitched as the ‘basic’ service, with its focus being on entertainment and an aversion to sports. YouTube TV is positioned as the ‘premium’ offering. Three months of YouTube Premium are also being offered, to sweeten the deal, but our sympathies lie with the T-Mobile customer service reps that are going to have to explain the intricacies of Google’s video branding.

The TVision dongle was the easiest way to connect TVs to the internet. Powered by the Android TV suite, and costing $50, they were launched in November 2020. In less than six months of operations, T-Mobile will have shuttered its in-house operations.

Evidently, the return on investment wasn’t appealing.