Roku’s Wood Believes Virtual MSOs are Near

Mari Silbey —  September 21, 2012 — 10 Comments

Amid new Roku apps and the launch of the Roku Streaming Stick, company CEO Anthony Wood also let slip this week that Roku “has been in talks” with companies about introducing new lower-cost, broadband-only TV services. Wood said at a recent industry event that he expects a new virtual MSO to pop up in the next 12 months. Such a company would offer a limited channel line-up delivered entirely over the Internet, and would target consumers unwilling to shell out major cash for cable TV.

We’ve heard people forecast the rise of virtual MSOs before, but the timing was never right. Today, however, consumers are well accustomed to watching TV online, and both content and service providers have had time to experiment with different models of Internet delivery. We’re also already seeing companies like Aereo and Skitter test out hybrid television models, suggesting that there’s a market for cheaper TV service.

It’s important to note, though, that Wood doesn’t expect some new start-up to jumpstart the virtual MSO market. Says Wood: “A lot of this is about getting access to the content, and that requires a lot of money and experience to structure it well.” That means we’re looking at an industry incumbent to be the source of a new online TV service. And it also means that any future venture is only going to move forward in a mode of extreme caution. Incumbents want to protect their existing revenue sources. Any new service will operate with that premise at its core.

10 responses to Roku’s Wood Believes Virtual MSOs are Near

  1. Seems like Netflix and Youtube might be possible contenders for this new service. Both are producing original web-only content, as well as money and experience.

  2. Bottom line: no matter how content is delivered, we’ll be asked to pay as much as possible, which seems to be around $120 for cable, devices and Internet. These companies are just fighting over how much of that slice will be theirs… if we get virtual MSOs (and I agree Netflix seems well poised to get in there for that) that charge $20/month, you can bet your ISP will soon be charging $100/month for the connection…

  3. Oh, we’ll get virtual MSOs. And you can bet Comcast and Verizon will be behind them. Mike’s right, we’ll continue to pay more than we’d like.

  4. All we will need is a big enough pipe to get whatever we want (video, VOIP phone, etc.)

    And the cost might be lower than you think, with Wi-Fi and new tech like 802.11ac.

    You probably didn’t want to share your internet connection when all you could get was 3MBps DSL.

    But splitting the cost with a neighbor becomes a lot more attractive when you one get a 50 or 100MBps connection for what you used to pay for that DSL.

  5. I’m not worried about the pipe. I’m worried about the content licensing. The established players aren’t motivated to make less money and they’re the ones with the relationships – both content providers and customers.

  6. Well, what do you want to watch?

    I’ve been purchasing my ‘cable’ programming via my Tivos, starting the week Amazon introduced its “Unbox” service.

    That allowed me to drop my cable subscription down to ‘broadcast channels’ – at the time, $8/month.

    I then bought whatever cable shows I wanted via Unbox, per-episode, commercial-free.

    It got even better when I switched to HDTV – dropped cable altogether, put up an antenna for OTA HD, but I still buy cable shows in HD from Amazon.

    I can even subscribe and have them automatically pushed down to my Tivo.

    I supplement that with Netflix (GREAT for kids) for a whopping $8/month.

  7. This sounds strangely familiar… I remember reading somewhere in the last few days (sorry, no clue where – I read tons of stuff daily, mostly odd little snippets here and there from obscure sources) that Dish was preparing to do just this – ie: offer a limited online subscription, if they could get some of their content suppliers to go along with it.

    I actually feel like Dish is making more of an effort than a lot of the others in trying to cope with cord-cutting in a less negative way than by punishing their subscribers. They’re not making a whole lot of headway, but I’ll give them credit for trying!

    Whether it’s Dish, or Comcast or some new player, I believe that this is the next step in the evolution, and it won’t be very long before we see this showing up on the web.

  8. “But splitting the cost with a neighbor becomes a lot more attractive when you one get a 50 or 100MBps connection for what you used to pay for that DSL.”

    Yeah, just like people used to share C Band dishes and decoder box parts…..

  9. Does SkyAngels’s FaveTV qualify as a virtual MSO? All their content is delivered over broadband and they have major channels like Fox News along with odd niche stuff.

  10. Two possible scenarios for virtual MVPDs, not mutually exclusive:

    1. Verizon or Comcast launch a service that allows viewers from outside their home markets to subscribe to their service. This will appeal to the low end of the market

    2. Intel or another outlier comes up with a limited package that has a really sweet interface and all sorts of bells and whistles. Think the difference between what your smart phone can do vs what your landline can do. This will be priced to the high end of the market.

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