Personalized MTV: Is Viacom Looking At Innovation To Improve Viewership?

Reports suggest that Viacom (NASDAQ:VIA) France is working on making MTV more personalized and recently launched MyMTV in France. ^[1] This move comes after the company launched an interactive kids channel, My Nick Junior, in France, China and Malaysia in 2014. ^[2] As consumers migrate to alternate streaming media, Viacom is providing MTV viewers the option to create five simultaneous channels with assorted MTV content of their choice, which can be selected based on music genre, a favorite period in history and other such criteria. Jacdew Research suggests that total pay-TV subscriber losses in 2015 were more than 500,000 as an increasing number of consumers are opting for alternative streaming media, primarily due to high costs of pay-TV subscriptions. ^{[3] [4]} We believe innovative techniques such as personalization can generate viewer interest and  benefit Viacom in the long term.

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Falling Ratings, Cheaper Bundles Continue To Remain A Threat

According to Nielsen’s live-plus-same-day data, Viacom’s MTV registered a 23% decline in prime time ratings for 2015, compared to an average rate of 12% decline for the bigger cable outlets. ^[5] Declining ratings increase the threat of pay-TV networks dropping Viacom. In 2014, 60 small cable operators dropped Viacom’s channels, which according to the company accounted for only 2% of its subscriber base. ^[6]  However, in October 2015, Viacom inked a distribution pact with AT&T dispelling some concerns around its future. The company’s distribution deal with Dish Network is due for renewal in 2016 and its valuation can be impacted if this deal is not renewed. (Read What Happens If Dish Decides To Drop Viacom) Although Dish along with other pay-TV networks is raising subscription costs in 2016 on higher programming costs, it has been losing a significant number of subscribers, which might prompt the network to drop some channels in the future and create cheaper bundles. Personalization is considered to be the future of TV and experts believe that delivery of an immersive experience will become important to attract and retain viewers. Viacom appears to be working on this strategy by taking measures towards personalization. ^[7] According to our estimates, MTV U.S. accounts for more than 8% of Viacom’s valuation, and we expect MTV’s penetration of U.S. Pay-TV households to be stable around 89% over our forecast period.

Viacom has been impacted by the cord-cutting trend and its channels appear to be losing their popularity. Personalized offerings make it similar to streaming media where users have more control over the content and can customize to their viewing requirements. While Viacom is using this innovation selectively in a few regions, positive results might encourage the company to roll this out to a wider audience and improve viewership.

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1. Viacom France introduces personalized MTV, Telecompaper, December 31, 2015 [↩]
2. Viacom launches My Nick Jr. In Malaysia, Marketing, September 2014 [↩]
3. Cable Companies Are Expecting Subscriber Growth This Year, The Motley Fool, December 28, 2015 [↩]
4. Cable Bills Are Rising Again, Bloomberg, December 23, 2015 [↩]
5. 2015 in Review: Cable Ratings Plummet as Live Viewership Dwindles, Advertising Age, December 2015 [↩]
6. Dropping Viacom Costs Suddenlink  Few Subscribers, The Wall Street Journal,  February 2015 [↩]
7. How Personalization and Analytics can drive future of TV, Telecom Drive, June 2015 [↩]