So there is pricing pressure on the OTT services that they perhaps didn't anticipate and there's a different pressure with respect to being able to obtain popular content (at least in first-run status). That doesn't bode all that well for the services that don't have a lot of their own content and it wouldn't seem to be a good omen for services trying to cover many of the bases (YTTV, PS Vue, Sling et al). The networks taking their content direct is beginning and I don't see anything that is likely to stop it (unless the networks have wildly underestimated the cost of dealing with customers -- a very real possibility).
No, it won't stop. We're in a long-term transition away from using MVPDs as middle-men distributors who package up content (i.e. channels) from lots of different owners into a single bundle, and toward a system where consumers buy individual bundles directly from each content owner. In a way, we're getting what lots of folks always said they wanted: a la carte. Except those folks were always taking about the ability to pick and choose individual linear channels. But, of course, linear channels really serve no purpose once content has shifted to the internet. And the content owners see no value in selling consumer tiny little slices of their overall content portfolio. So instead, we see them either sell you their entire package (e.g. Netflix, HBO Max, Peacock, Prime Video, Apple TV+) or break it up into 2 or 3 smaller packages which can be combined at a discount (e.g. Hulu/Disney+/ESPN+; Showtime/CBS All Access).
As you say, the future looks dim for pay video distributors who don't own any content. They're getting disintermediated. The future belongs to content owners who can go direct-to-consumer. And then they also have the option of offering packages of add-on linear channels from their competing content owners (as long as the linear cable channel system still exists). This is what Hulu does with their live TV add-on and AT&T/Warner has said they'll do the same with HBO Max. Hard to imagine that Comcast/NBCU won't do this with Peacock too, given that Comcast has just a
bit of experience in packaging and selling cable channel bundles. Remains to be seen whether ViacomCBS will do it with CBS All Access. (I don't know why they wouldn't. But first, if I were them, I'd build out the core service by adding in a bunch of that newly acquired Viacom content, plus all their free Pluto TV channels. Allow Showtime to be added and accessed inside the same app too. And then it would make total sense to sell an optional add-on bundle of live cable channels that could integrate with their free Pluto channels, all right in the same All Access app.)
This is why I don't see any long-term future for cable TV distributors that don't own content, like Charter, Verizon, Cox and Altice, much less the vMVPDs like Sling, PS Vue, and Fubo TV. The only non-content-owning vMVPD that can survive is Google's YouTube TV. (Well, OK, Google owns a lot of user-uploaded stuff via YouTube, but they don't own a lot of Hollywood-quality TV and movies.) And that's because Google already has a huge lead in digital advertising, plus a robust streaming video platform. And they have a ton of money, so they can price YouTube TV at a slight loss for now while they scale it up to a point where the economics eventually work, thanks to increased ad revenue and lower channel carriage rates per subscriber. Their new distribution deal with Verizon, in which they sell YouTube TV to their own home broadband and mobile customers, should help boost their subs. I expect to see a lot more such deals in the future as network operators decide to ease out of the business of running their own cable TV services and instead just re-sell one or more of the big OTT services and take a little kickback.
