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Rattling the TV industry might not be so easy for T-Mobile

by Justin Herrick | January 26, 2018January 26, 2018 12:00 pm PST

Soon you could be watching live and on-demand television from a service made by T-Mobile. Knowing that its success in the wireless industry will ultimately lead to an acquisition, merger, or cutbacks, T-Mobile is thinking about a future on its own. Its competitors are, as everyone knows, in the business of buying their way to the top because consumers are choosing less expensive plans and holding onto their phones longer. If you’re not diversifying, you’re not surviving.

The big idea coming out of Bellevue to be implemented this year is a video streaming service. No, it’s not quite an original idea. It’s just an ambitious one considering the field is stacked with options. Somehow, someway T-Mobile would like to change the way we watch television.

Aggressive business strategies gave the Un-carrier a much-needed boost in the wireless industry. It took a few years to accomplish, but now T-Mobile is well-established and respected. Even peers like Verizon, AT&T, and Sprint have quickly made announcements copying promotions and incentives rolled out first by T-Mobile. Although it doesn’t have the highest number of subscribers in the nation, T-Mobile certainly has the loudest voice.

The same just isn’t going to happen in the television industry. Whereas the wireless industry is dominated by a small group of four companies, the television industry’s participants are many times larger. T-Mobile will be walking into a battlefield involving old media companies like Disney and CBS, standalone companies like Netflix, and cutting-edge tech companies like Facebook and Google. There’s going to be competition at every turn, and T-Mobile doesn’t appear strong enough to break through all of them.

Think about how expensive it is to create a compelling video streaming service in today’s world. T-Mobile struck a deal to buy a company with limited experience, but its deal-making ability has yet to be seriously tested. Then, once the service is live, the company will need to promote it with a sizable advertising campaign otherwise no one will know it exists.

Consider this: T-Mobile’s Q3 2017 net income was $550 million. The company isn’t likely to get into original programming with its upcoming service, but it’ll need to build out the infrastructure required to host a large influx of users streaming at the same time. Add in the ongoing investment to bolster a fast, reliable 4G LTE network in addition to the framework for a 5G network. T-Mobile’s budget seems tight.

Buckets of cash aren’t waiting to be spent. Verizon and AT&T operate in many other industries, not just wireless. SoftBank, Sprint’s parent company, does the same. If T-Mobile makes a bad decision and blows it with this service, investors are going to turn their backs.

Truth be told that we don’t know much about T-Mobile’s plans yet. Although it announced the purchase of Layer3 TV late last year, the company still hasn’t shared anything like how the service will operate, when it will launch, and its price. T-Mobile has only said the service arrives in 2018.

The assumption, however, is that Layer3 TV’s now-defunct business model will be rebooted with a fresh coat of magenta-colored paint. So maybe we know exactly what T-Mobile intends to put on the market. Layer3 TV, before it was acquired, merged live TV streaming and on-demand streaming. The product was basically an all-in-one hub to watch shows as they aired or tap into the vast libraries on Netflix, Hulu, and HBO Now. T-Mobile released a video on the day of the acquisition’s announcement backing up the belief that Layer3 TV won’t be overhauled.

But even then you have to wonder whether or not consumers will be interested. Merging the two forms of content consumption seems cool on paper. In reality, it’s not really necessary.

Nearly everyone has at least one device that can handle video streaming. Phones, tablets, televisions, set-top boxes, video game consoles, and sticks are available to get the job done. So what will T-Mobile’s service solve? That’s unclear, which is very bad considering a lot is riding on this service.

Regardless of what T-Mobile says, two major problems exist.

T-Mobile’s user interface – based on the released mockups – resembles a traditional guide, and boils down to being the same as a home screen on a mobile device or smart television. Consumers haven’t complained about the modern home screen; therefore, T-Mobile hasn’t figured out a better way to serve content.

The other issue is the price. T-Mobile can’t offer an appealing all-in-one subscription when consumers can already easily pick and choose the service(s) they want to save money. Live TV streaming services like Sling TV, DirecTV Now, and PlayStation Vue are not only affordable enough to cut the cord but also give you access to on-demand shows and movies. It’s completely up in the air what pain point T-Mobile would like to eliminate.

Obviously there’s a lot left for T-Mobile to say about its plan to shake up a crowded landscape, but no question a ton of money is about to be spent. And it’s money in the bank that T-Mobile doesn’t have anyone else beat on. Then again, no one thought T-Mobile would rise to rival Verizon and AT&T as fast as it has.

Remember how crazy the Un-carrier movement seemed five years ago? A foul-mouthed executive named John Legere took the stage at numerous media events to introduce ideas that were unheard of. The other three major U.S. carriers would never dare to do anything like T-Mobile did. Well, they ended up doing so. T-Mobile and Legere figured out a way to change our perception of a brand that always lagged behind while making industry leaders scared.

While we may not understand it now, perhaps T-Mobile’s next risky bet will pay off and reshape the television industry. We’ll look back and think to ourselves, once again, betting against those magenta lovers even if all signs tell you otherwise is a mistake.


Justin Herrick

Justin is easily attracted to power buttons. His interest in technology started as a child in the 1990s with the original PlayStation, and two...

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