Hulu, other vMVPDs ramp up affiliate deal chest-thumping

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This week, Hulu announced that it had carved out a deal to retransmit The CW network on its new live TV service, just days after touting that it had reached agreements with 201 affiliate stations for the Big Four broadcast networks. 

Both of these deals came on the heels of DirecTV Now and FuboTV touting a long-awaited agreements to carry CBS, and YouTube TV signing a major retrans deal with station owner Sinclair. Sony’s PlayStation Vue has also been very active on the announcement front, touting 11 more network affiliate deals last week. 

What’s with all the chest-thumping?

RELATED: Hulu adds CW to vMVPD service

The area of retrans deals with local broadcast affiliates has suddenly become one of the hottest battlegrounds in the video business, with around a half-dozen virtual pay-TV operators one-upping each other on a nearly daily basis to announce new distribution pacts. 

These fledgling online video distributors are fairly coy about other major components of their businesses—only AT&T has officially announced a subscriber total for its vMVPD, telling investors during its Q2 earnings report last month that the service is now up to 500,000 customers. So it’s curious as to why these operators are so aggressively seeking attention for these agreements. 

“Virtual MVPDs are competing both with traditional pay-TV and with each other. Those landing affiliate deals believe that the advantage of offering local broadcast channels will not last for long (since affiliates will likely cut deals with rival vMVPDs as well), so they want to move quickly to capture market share as best they can,” said Brett Sappington, senior director of research for Parks Associates

Carving a deal out with local affiliates allows operators to livestream local stations as opposed to merely offering on-demand access to the limited programming of the affiliated major network. Apple’s inability to carve out a comprehensive set of these deals led to the technology giant abandoning plans for virtual pay-TV service two years ago. For its part, YouTube TV, which is slowly deploying across the country, seems reluctant to go into any market in which it hasn’t reached agreements with the Big Four local affiliates. 

“Local broadcast TV is one of the most popular areas of content that has been missing from OTT video services, and one of the few omissions that has separated traditional pay-TV services from virtual MVPD services,” Sappington explained. 

“Separation” seems to be a hot-button word here. Not only are vMVPDs trying to become replacements for traditional pay-TV services, they’re competing against each other. And from their ubiquitous cloud DVRs to their $35-a-month-give-or-take price points to their access to major sports channels like ESPN and TNT, their offerings are essentially the same. 

Being able to provide a more access to local channels in more markets is a key differentiator early on. 

“Success in OTT is largely boiling down to the popularity of the content available in a service. Services are quick to announce and promote any content deal of relevance to a potential subscriber base,” Sappington added.