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Philo: 2 Reasons Why It Will Likely Fail

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Philo, the latest entry in the increasingly-crowded live streaming business, launched yesterday with a $16-a-month plan for 37 channels.

The service, which also offers a 46-channel package for $20 a month, is different for two reasons:

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1. Philo is less expensive than its live streaming rivals.
At $16 a month, the service’s basic plan is half as expensive as DIRECTV Now (starts at $35 a month) and it’s even cheaper than Sling TV, which has offered a $20-a-month package since its debut in January 2015.

2. Philo does not offer any sports or local channels.
Philo’s lineup is a who’s who of basic cable — A&E, AMC, Discovery, TV Land, History, MTV, Comedy Central, HGTV, Nick Jr. and many others that you can peruse here.

By leaving sports, and the local channels, out, the service is able to reduce the cost of acquiring programming and therefore offer the least expensive plan. Philo’s rivals, such as DIRECTV Now, Sling TV, Hulu Live and Layer3 and YouTube TV, all offer sports and some network affiliates.

But while Philo, whose investors include Discovery, A&E, Viacom and other big dogs in the basic cable industry, has carefully carved out a niche, the service has also laid down two major obstacles that could stop it before it starts.

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1. It might be too late. 
The live streaming category has not grown the way some analysts thought it would. Due to technical snafus, limited lineups, and other causes, most consumers are either opting to stay with their pay TV operators, or drop pay TV service entirely. And there’s little evidence that the live streaming business is expanding other than in slow increments. Philo now must compete for customers in a small category that’s not really growing.

Philo might say online viewers have just been waiting for a non-sports, cheaper plan all along, but at $16 a month, it’s only $4 less than Sling TV which offers basic cable channels, sports and locals for $20 a month.

Plus, consumers could just opt for Hulu, which offers a boatload of basic cable programming (and original shows) for $5.99 a month, or Netflix, which does the same starting at $7.99 a month.

2. Sports and locals still matter.
For Philo to survive, it will have to convince a significant number of consumers that sports and local channels aren’t that important. What really matters, Philo will contend, is the programming found on the basic cable networks.

Well, you might get some people who will say they can do without sports. And you might get others who will say they can do without their local channels. But you won’t find very many who will say they don’t need either one.

At some point, Philo undoubtedly will revert to the ‘get an antenna’ strategy to appease local channel fans. But there’s a reason why DIRECTV Now and other streaming rivals are working hard to add more local channels: the antenna option is still inconvenient for many because of geographic and technical limitations. People would prefer to have their local channels on their pay TV service.

So Philo has an uphill fight, and it won’t be helped along the way if more live streaming services enter the fray, which is quite likely.

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— Phillip Swann

About TV Answer Man (704 Articles)
The TV Answer Man is veteran journalist Phillip Swann who has covered the TV technology scene for more than two decades. He will report on the latest news and answer your questions regarding new devices and services that are changing the way you watch television.

3 Comments on Philo: 2 Reasons Why It Will Likely Fail

  1. Shoufeng Yang // November 15, 2017 at 1:21 pm // Reply

    Unfortunately you are right, local channels are important to me. $5.99 for CBS All Access is ridiculous, I don’t know what to do!

  2. Excellent analysis. Got to say this sounds like the best argument yet for staying legal in acquiring the content many want to watch at a reasonable cost, but as you point out it is a very specific audience, non-sports with antenna for locals.

  3. Bob in Illinois // November 15, 2017 at 5:23 pm // Reply

    For sure, people want their Local TV but hope that most can discover how to do that for Free with a good antenna. No Sports in this streaming package, but that greatly eases the price point.

    My main point is that this Discovery/Nickelodeon/lifestyle package would naturally appeal to women. Maybe that’s their demographic target and marketing appeal. I believe that we have seen that a large share of cable TV customers don’t watch sports anyway. Doesn’t apply to me, but I certainly know that we all have our own interests.

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