Sony is seeking to sell off its PlayStation Vue TV business for a figure in the “tens of millions,” ending a multi-year experiment in taking on cable companies with lower-cost, “skinny” streaming TV bundles.
Citing people familiar with the situation, The Information reports that Sony began working with Bank of America Merrill Lynch to explore the possibility of selling Vue as the company seeks to raise its stock price by shedding businesses that are not making money. The sources said that Vue loses money largely because of high costs for content, for which Sony believes it pays more than some direct competitors in this space like Hulu or DirecTV because it has less leverage in the TV and film industries.
Sony has approached one potential buyer, sports streaming service FuboTV, but apparently to no avail. The report claims Sony’s service has 500,000 US households ad subscribers, and it has raised the prices of its bundles multiple times in a failed effort to achieve profitability. The sale would transfer those subscribers, along with Sony’s technology, to the potential new owner. But not all of the service’s hard-to-secure content deals would necessarily transfer in the sale, potentially complicating the sale’s prospects.
Vue was an ambitious original project when it launched as one of the first broadcast-over-IP cable-replacement services in 2015. Since then, it has been joined in the market by offerings from Hulu, Google, and Sling TV. None of these services have been resounding successes, either, but most of them have many times more subscribers than Sony’s. While they offer some unique features, they are fundamentally still cable TV bundles—with much of the baggage that goes with cable, including users paying for networks they don’t actually want due to that bundling.
With new, more focused streaming services like Disney+, Apple TV+, HBO Max, and Peacock right around the corner, it’s reasonable to conclude that the à la carte model is on a path to victory with US households. While some bemoan the proliferation of these services and ever-mounting subscription costs, services like Netflix, HBO Now, and those upcoming ones at least do not require users to buy into expensive bundles to access content they want. They also often provide better user experiences in other ways—making them superior to cable and cable replacement services in most people’s eyes.
Having worked in the streaming TV business previously, I always knew economics were never there for a single, $10/month subscription to all the nation’s most popular TV shows, anyway. As quality standards have risen, TV has gotten more expensive to produce in recent years, not less, even as consumers gradually spend less on cable bundles. Cutting out the middle-man that is the cable company has proven the best way for networks to bankroll today’s expensive TV shows.
Unbundling sports network subsidies was never going to be enough to make that original Netflix dream possible, so it came down to two options: replicate some portion of the cable experience via streaming, as Vue and YouTube TV have done, or use a litany of individual content subscriptions, as is the model for Disney+ and its ilk. The market seems to be trending toward the latter.
While Microsoft initially introduced its Xbox One game console as a multimedia device focused on more than just games, Sony has largely kept the messaging around the PlayStation 4 focused on gamers. Sony’s dominance in the current console generation has been credited partially to that decision. Even Microsoft eventually followed suit and ended many of its early TV initiatives for the Xbox One in response.
However, that focus makes Vue seem like an awkward fit for the platform, which is another possible explanation for the service’s relatively slow growth. It’s worth noting, by the way, that Vue is the only cable-like subscription streaming service available on the PlayStation 4. Sony has thus far not worked with Hulu or YouTube to bring their competitors to the platform. That could shift if Vue changes hands, though.