Venu Attempts to Change the Game
Last week, pricing was announced for Venu, the upcoming standalone streaming sports service that will launch as a virtual MVPD. It will cost $42.99 a month, which is far more than any entertainment SVOD service, yet less than what you would pay to watch the same sports programming through a pay TV provider. Or is it? Comparable programming from a virtual MVPD provider such as Sling TV costs slightly more, but also includes additional sports on NBC, CBS, and RSNs. Indeed, Venu executives claim the service is not geared towards those subscribers, but instead is aimed at cord cutters who do not have a cable, satellite, or a virtual MVPD service.
Most Cord Cutters Disagree
Despite its cord cutter focus, Venu actually has the greatest appeal among virtual MVPD subscribers, according to Circana’s 2024 TV Switching Study, with nearly one-quarter (23%) of those consumers reporting they are extremely or very likely to subscribe this fall. I expect reality to be significantly different from intent, however, and expect that actual adoption by virtual MVPD subscribers to be far lower since Venu has fewer sports rights than other virtual MVPDs.
Non-pay TV subscribers, the core target audience, are the least likely to say they will subscribe when the service launches this fall. In fact, only 5% of these consumers expressed positive interest in subscribing. To understand this dichotomy, one only needs to recall the reason these consumers don’t pay for cable TV today: cost sensitivity or little interest in sports programming.
Overcoming these challenges will require creative marketing, a broader array of sports rights, and attractive pricing which will likely be achieved through SVOD bundles such as the planned packaging with Max, Disney+ and Hulu.
Building the New Channel Bundle
The Venu joint venture is comprised of some the most discerning media powerhouses: Disney, Warner Bros. Discovery, and FOX. These companies would not be contributing their prized content assets to a new joint venture without a strategic plan that contemplated these challenges.
What we are seeing is the construction of a new “pay TV” channel bundle. Now that the industry has embraced competitive SVOD bundles, sports are the remaining content need. Sports rights are shifting to streaming providers such as Prime Video (with the company’s new NBA deal) and now this aggregation of programming into a single service, Venu. It’s more likely success will come from Venu being bundled with must-have SVODs like Hulu, rather than consumers paying $42.99 a month for Venu alone. This is what will provide a more attractive consumer value proposition. More importantly, this allows all viewers, not just non-sports fans, to cut the cord. In fact, 44% of those extremely likely to subscribe to Venu are also extremely likely to say they want to cancel pay TV when they subscribe, according to Circana’s TV Switching Study.
What’s Next for Venu and Streaming Sports?
It remains to be seen how successful Venu will be. There are numerous barriers, such as the pending lawsuit with Fubo and a value proposition that does not appeal to today’s cord cutters. But the goal is not to create a seismic market shift at launch; rather to control the new TV bundle which will better monetize sports rights as the pay TV subscriber base erodes, and maximize customer retention for core SVOD services such as Disney+ and Max. This is the evolution the industry has been waiting for since cord cutting began a decade ago. What’s certain is that the genie is out of the bottle and we’re seeing the structural change in how programming is monetized and delivered to viewers. Essentially, Venu is aiming to skate to where the puck is going to be, not where it has been.