TMUS T Mobile US Inc

By Drew FitzGerald 

Online television bundles are getting bigger and prices keep rising, edging closer to the cable bundles they were designed to replace and muddling the economic equation that has prompted millions of Americans to cut the cord.

YouTube TV, started two years ago as a lower-cost alternative to cable, said this week it was raising its monthly rate by $10 to $50 and adding channels such as HGTV and Food Network. T-Mobile US Inc., a wireless carrier that has been looking to jump into the video business, said it would start selling a $100 monthly home-TV service with more than 275 available channels.

YouTube TV joined a growing list of services padding their online video bundles with more channels and raising prices in the process. The service, which started with about 40 broadcast and cable channels, now has more than 70 and costs 40% more than it did when it was launched.

"We've been working to build a package that fits your needs,'" YouTube TV vice president Christian Oestlien wrote in a blog post detailing the change and eight new channels from Discovery Communications Inc.

Alphabet Inc.-owned YouTube and Hulu are among a host of companies that have tried to attack the pay-TV fortress that rules the entertainment industry by launching slimmer bundles of channels tailored to what individual customers want to watch. But as programmers have raised the fees they charge to carry their channels, the online services have had a harder time holding down prices.

Streaming services Sling TV, DirecTV Now and Hulu, which have signed up millions of subscribers in recent years, have all raised the price of their lowest-tier video packages over the past year. Much like customers can easily disconnect or cancel the services, providers can also quickly change prices and channel packages.

Hulu, whose owners include Walt Disney Co. and Comcast Corp., illustrated a widening gap between on-demand brands and cable-like bundles that carry live sports and news. The website lopped $2 off the monthly cost of its basic library of situation comedies and original dramas but added $5 a month to its live-TV package.

Dish Network Corp.'s Sling TV and AT&T Inc.'s DirecTV Now are owned by traditional pay-TV companies wary of wounding their most lucrative business. Both services have signed up millions of new subscribers while their satellite brands lose customers, but the growth comes at a cost to their bottom lines.

Disney and AT&T are also preparing to launch new on-demand services later this year, as they seek to compete with Netflix Inc., which has also recently raised its monthly fees. Disney is expected to provide details on its new service later Thursday.

Online TV still undercuts traditional cable- and satellite-TV subscriptions by avoiding service fees and charges for add-ons such as DVR rentals. While U.S. television households with pay-TV services fell to about 78% last year, off from 87% in 2008, the amount they spend on such services hasn't, according to annual surveys by industry tracker Leichtman Research Group. The average home spent $107 a month on pay-TV service in 2018, according to Leichtman's phone survey of 1,100 adults last fall.

T-Mobile last year spent $325 million to buy Layer3 TV, a cable-like service offered in a few cities, with the goal of designing a nationwide mobile video service for its cellphone customers. But the service has struggled to gain the carriage rights it needs to air many channels, according to people familiar with the matter.

T-Mobile's service, rebranded TVision Home, is limited to eight cities, including Chicago, Los Angeles and New York. The cellphone carrier's customers can get a $10 monthly discount, but its total cost approaches those from competing cable services and doesn't include a broadband connection. Like a traditional cable feed, it requires a set-top box connected to a television. The wireless carrier says a mobile version of the service is still in the pipeline.

"That's not very disruptive," BTIG analyst Walt Piecyk wrote in a note to clients. "T-Mobile is offering a service that is nearly identical to those from existing providers, even down to the remote control, which actually has legacy cable buttons of red, green, yellow and blue."

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

April 11, 2019 13:02 ET (17:02 GMT)

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