In early April, I penned an article explaining how wireless name T-Mobile (NASDAQ:TMUS) was not only on the verge of becoming a cable television provider, but becoming a good one. It was simply waiting on the advent of 5G to become the un-cable option, the same way it branded itself as the "uncarrier" of the mobile world.
The COVID-19 pandemic, of course, derailed those plans. 5G hardware has been tough to procure and place, while prospective buyers are wary of stepping out or making a commitment to TVision. The streaming service starts at $90 per month in the few places it's available, which is a cable-like price that could cause many would-be buyers to balk.
T-Mobile is still forging ahead with TV where and how it can, though. Two pieces of hardware that will help power its streaming cable service have since come to light, and they each tell us something about the telecom's streaming television strategy.
Inclusive rather than exclusive
In short, T-Mobile is embracing Android TV.
It's not terribly surprising. Android's owner Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) has turned up the heat on TV hardware of late, setting the stage for more enforcement of its smart TV intellectual property in March, and making Android TV the official operating system of its Chromecast television dongles in June. Android TV is also the brains of the new streaming cable option from AT&T called AT&T TV. Now Android TV is utilized in the TVision remote control that the FCC was finally able to reveal earlier this month, soon followed by the TVision dongle that also runs on Android TV.
That hardware is an upgrade from T-Mobile's current TVision set-top box, but not just because it's smaller and out of the way. Android TV arguably gives T-Mobile a chance to steer users toward TVision (although if they have the dongle, they already have TVision). At the same time, it makes it easier for subscribers to connect to other content they may also subscribe to, such as Netflix or YouTube. They simply download the app from the Google Play store.
It seems like a minor matter on the surface, but that feature is actually quite telling given something T-Mobile's now-former CEO Mark Legere said in early 2019. During the company's fourth-quarter 2018 conference call, he explained:
"[We] don't have plans to develop an undifferentiated skinny bundle out there. There are plenty of those. But we think there's a more nuanced role for us to play in helping you get access to the great media brands out there that you love. And to be able to put together your own [monthly] media subscription in smaller pieces, $5, $6, $7, $8 at a time, it's an exciting future for us."
Giving customers a familiar platform (with access to an equally familiar Google Play store) rather than putting up hurdles to non-TVision content jibes with Legere's message from more than a year ago. T-Mobile wants to sell you hardware that lends itself to how people buy and watch TV. Financial services firm Deloitte says the average consumer in the U.S. is signed up for three streaming services. Ampere Analysis pegs the figure closer to four. Both are probably pumped up due to COVID-19 lockdowns. Even if both pull back a little as the coronavirus abates, though, that still makes TVision's tech a very practical tool. Remember, T-Mobile only has to be one of those services for the model to pay off.
Just don't hold your breath
It's a brutal market no matter which way T-Mobile turns. AT&T not only sells streaming cable service, it sells the hardware needed to make it work as well. Alphabet sells Chromecast dongles, but its YouTube TV is a clear alternative to conventional cable. It's not as if T-Mobile's premise itself is cutting-edge stuff.
It's still encouraging to see T-Mobile position itself as a multifaceted wireless TV media platform that also sells cable service, rather than as a tightly closed ecosystem that doesn't make it easy to find content from anywhere but T-Mobile. This flexibility, ironically enough, makes it easier to sell TVision service because consumers can trust that the tech will be highly accommodating and easy to use.
Now the company just has to work on the price. At $90 per month, not only is TVision encroaching on linear cable pricing, AT&T is able to offer a better introductory price. That price goes up after 12 months, but not considerably more than TVision's monthly cost.
T-Mobile is also turning up the heat at a tough time for the entire streaming cable business. While YouTube TV and Disney's Hulu+ Live managed to add subscribers in the first quarter, S&P Global Market Intelligence, MoffettNathanson, and Leichtman Research Group all estimate that virtual cable providers collectively lost nearly 300,000 customers during the first quarter of the year.
It will be interesting to see if would-be video customers embrace or reject the service's underlying 5G connectivity, which is the only major differentiator. It looks like a tough sell though, regardless of the well-conceived package.