Sony PlayStation Vue: Why The Future Of Web TV Won’t Be Any Cheaper Than Cable

First the good news: You’re about to get some new choices in cable TV. Now the bad: You probably won’t save much money. Sony launched its PlayStation Vue TV service Wednesday, making it the first company to launch a Web TV service that actually resembles real TV, with more than 80 channels across three tiers of service.

But it is also priced like pay TV, starting at $50 a month for a standard package of 50 channels and going up to $70 with regional sports networks and additional music, lifestyle and family channels. That’s comparable to the national average of $64.41 for basic cable and does not include the $70 to $120 monthly broadband connection that the service needs to operate.

Sony’s service also comes with a big hole: no ABC or other Disney-owned channels, which means no ESPN.

“This may be the first major cable bundle to launch without ESPN,” said Richard Greenfield, an analyst at BTIG research. “It illustrates that as the [cable] bundle frays everyone will get hurt. Nobody is immune.”

Seven-Day Free Trial

With the launch of PlayStation Vue, Sony beats Apple to the punch and immediately becomes a player in the pay-TV universe, largely because of its installed user base of 35 million PS3 and PS4 game consoles in the U.S. Those users will get a seven-day free trial of the service, and if a significant number defect from pay TV, it could hurt incumbent cable, satellite and telecommunications providers like Comcast, Verizon and DirecTV.

Sony’s PlayStation Vue lands amid an explosion of choice for would be cable cord-cutters. Dish Network's Sling TV launched a 17-channel Web bundle for $20 a month in January; Apple is reportedly launching a 25-channel service for $30 to $40 a month in September. Add that to myriad standalone subscriptions such as HBO’s HBO Now, launching in April for $14.99 a month, Showtime’s coming Web service, and others from Hulu, CBS, NBC’s comedy channel and Viacom’s Noggin, and 2015 is bringing unprecedented choice for people who want to customize their TV bundle.

But it's only going to make pay TV incrementally cheaper. Subscribers have to own a PlayStation ($399) but won’t have to rent a set-top box or DVR. “$49 is a very compelling price point,” Greenfield said.

Sony is making sure that its interface looks nothing like the familiar cable grid. First off, you control it with PlayStation game controllers. Then there are no channel numbers, just networks and shows. The grid itself is de-emphasized for an AppleTV or Hulu-like tray of shows and recommendations. Programs are sorted by preference and popularity within the PlayStation network.

Sony also negotiated some interesting rights. Shows that aired within the past 28 days are available to watch anytime, without recording. Any movie that has aired in the past month on TV is also available on demand. During a demo, 395 movies were listed as available.

“The content would take two years to watch, if you didn’t sleep,” said Dwayne T. Benefield, head of PlayStation Vue, who has been working on a TV service since 2007.

The service will also showcase PlayStation’s original content, such as the “Power” superhero series, created by Sony Pictures Entertainment.

Rich Trove Of Data

Like any cable operator, Sony will sell advertising, but it has a rich trove of data to offer to its user base of largely 18- to 34-year-old men. That’s a demographic coveted by advertisers and difficult to reach because they’re thought to watch less traditional TV than young women. “We have one of the most attractive audiences, the 18-34 millennial which they are losing if not lost,” Benefield said.

Sony has long positioned the PlayStation as being for gamers first, while Microsoft sees its Xbox as a home entertainment system that also plays games. For years Microsoft has mulled its own Xbox TV service but instead opted to focus on Web video and standalone TV apps. Interestingly, Sony is launching the service with Comcast networks, but not Disney, while Apple is reported to be in an impasse with Comcast. Dish Network's Sling TV has ESPN and ESPN2 but little else.

PlayStation Vue has quite a bit of sports programming without ESPN. The basic, $49.99 tier has Fox Sports and NBC Sports; the mid-level tier ($59.99) adds regional sports networks like New York's YES Network.

The Sony service launches Wednesday in New York, Chicago and Philadelphia; other cities will be added as PlayStation acquires the rights to local stations.

Launching TV will put new pressure on the PlayStation network to perform. The service is a frequent target of hackers and suffered major downtime over the holidays, not something that usually afflicts other pay-TV providers. The service will also require a 10 Mbps broadband connection to work well. That’s the average speed for broadband service in the U.S.

Sony of course has no control over the price of broadband, which could go up as a standalone product if cable companies and telcos see their video and phone businesses dwindle. "Most of the PlayStation installed base are already paying for broadband," Benefield said. "We believe competitive forces will keep a good standalone broadband service available in most American homes."