One of T-Mobile's TVision displays at a Kansas store location.
Source: Wave7 Research
Everything has an expiration date, and in the case of T-Mobile US Inc.'s pay TV service TVision, some analysts say that may not be a bad thing.
Just five months after launching TVision in a bid to shake up the cable industry, T-Mobile said it will wind down the service April 29 and instead offer Google LLC's YouTube TV and budget-minded streaming service Philo to subscribers at a discounted rate. Beyond the YouTube TV deal, T-Mobile will also make Google Messages the default messaging app on its service; promote Google Pixel and other Android smartphones; and make Google One its go-to backup service for mobile data.
Analysts consider T-Mobile's decision a win-win for all involved parties — boosting Google and Philo's brand recognition while enabling T-Mobile to devote more time and resources to its other business efforts.
T-Mobile President and CEO Mike Sievert in a March 29 press release said T-Mobile's latest moves "may surprise some" given the short time between announcing and discontinuing TVision, but he considers the company's partnerships with YouTube TV and Philo its best bet to compete in an increasingly fragmented streaming TV market.
"Since launching the TVision initiative, we've learned a lot about the TV industry, about streaming products, and of course, about TV customers," Sievert wrote.
Evercore ISI analyst Vijay Jayant was not surprised by the announcement, noting that he has long been skeptical of the value proposition of a wireless carrier operating its own in-house streaming TV service versus partnering with an existing provider.
"While we would have preferred that TMUS not pursue this route in the first place, we see it as an incremental positive that the company is no longer dedicating incremental resources to an in-house video offering," Jayant said.
TVision launched in October 2020 and offers three subscription tiers that range from $40 to $60 per month and provide access to lives news, sports channels and local stations. Starting April 29, subscribers to those services will receive a free month of YouTube TV and Philo as part of the transition. Going forward, they will receive a $10 discount off YouTube TV and Philo's monthly prices of $54.99 and $20, respectively.
YouTube TV launched in 2017 and offers over 85 channels, including CNN (US), ESPN (US) and HGTV (US), and local broadcast stations in most markets. Meanwhile, Philo debuted in 2009 and offers over 60 popular channels like Food Network (US) and Nickelodeon/Nick At Nite (US) but does not carry local channels or sports.
While Philo's lack of sports programming has been considered a weakness, Brett Sappington, a vice president at global insights firm Interpret, thinks the company's T-Mobile partnership could attract viewers who care less about sports and are looking for a cheaper streaming offering.
"They're a smaller service; they don't have sports, so they're a relatively low-cost option," Sappington said in an interview. "But that also works well for T-Mobile because it's a streaming-first service like YouTube TV and there are a lot of consumers [who think] sports doesn't matter."
Sappington also described the various risks and expenses associated with operating a live TV service, from rights negotiations with cable networks to meeting lofty internal sales goals, making T-Mobile's latest partnerships all the more crucial.
"If you can add a little piece of revenue and minimize your risk, that's not a bad plan," he said.
As for Google, Jeff Moore, principal at Wave7 Research, a firm that analyzes competition in the telecom industry, said the tech company should benefit from one of the largest U.S. wireless carriers promoting its streaming service and more closely integrating its cloud storage and messaging features into its own offerings.
"It's definitely a positive thing for Google," Moore said.
TVision traces its roots to T-Mobile's 2018 purchase of online TV service Layer3 TV Inc. for $325 million. T-Mobile executives at the time said a deal with an established operator like Layer3 would be the company's best chance to gain a foothold in the rapidly growing digital TV market.