Venu: death on arrival, or destined for greatness?

Shortly after this post was published on Friday, August 16th, U.S. District Judge Margaret Garnett ruled against The Walt Disney Co., Fox Corp. and Warner Bros. Discovery in barring Venu from proceeding with its planned release, likely making the joint venture dead on arrival.

In the shifting landscape of sports broadcasting, a seismic shift is underfoot. Where once the giants of traditional networks held sway over the lucrative TV rights for live sports, technology behemoths such as Google, Amazon, and Netflix have begun to encroach upon this bastion of television royalty. These developments have inevitably rendered the traditional cable network model increasingly irrelevant, leading to the innovative yet contentious launch of Venu, a collaborative direct-to-consumer sports streaming service from Disney, Warner, and Fox.

Scheduled for launch on August 23rd and priced at $42.99 per month, Venu represents a bold (or foolish?) attempt by its creators to reclaim their dominion from the clutches of tech companies. At the same time, Venu is aiming to please existing partners (i.e. MVPDs such as Charter and Comcast who write the carriage checks) by aiming to entice the cord-cutters and the cord-nevers. However, skepticism abounds regarding the viability of Venu (with some of them claiming death on arrival).

The pricing strategy is a first point of contention. After all, consumers can access a broader range of content on platforms like YouTube TV or Hulu Live for a slightly higher fee. Related to this is the thought that Venu will simply cannibalize existing carriage deals rather than generate new incremental revenue (or: divert revenue from established partners to DTC).

Adding to the service's tumultuous inception, FuboTV has launched a lawsuit against Venu, alleging antitrust violations and claiming the joint venture restricts licensing to Venu exclusively (sidelining other distributors). This legal battle, occurring mere days before Venu's intended debut, casts a shadow over its potential success.

And last but not least, there are some simple business practicalities that have drawn criticism. Building a robust streaming service, complete with a user-friendly interface and reliable technology, typically requires 6+ months, if not years, of development. Venu gave itself a few months and is now only days away from launch.

The considerations above are short-term in nature and, therefore, possibly moot in the longer term. As a matter of fact, in the near term, Venu may simply not achieve (or intend to achieve!) much.  It will probably not even have much of an impact on the cable TV market (and MVPDs); the decline of cable is certain, and will neither accelerate or slown down because of a new DTC sports bundle which can be easily replicated elsewhere at almost the same cost. And for the cable-nevers, $43 per month is unlikely to be sufficiently compelling to get back in the game (no pun intended). 

Indeed, this venture is all about what happens after 12 to 24 months (and a possibly tumultuous launch). Stable in the saddle, and without having antagonized much of the MVPDs, Venu can go out and start striking its own sports licensing deals. The collective bargaining power of Disney, Warner, and Fox could enable Venu to challenge the likes of Google, Amazon, and Netflix effectively. And unlike these technology companies, Venu can offer equity participation to the leagues, allowing the latter to get one step closer to the fans (or: being not just the content creator, but also distributor). Thus, what seems like a precarious venture today could well be remembered as a prescient strategic move in the ever-evolving narrative of media and technology convergence.  

Still not convinced? Similar to the early days of Hulu—also a product of a joint venture among these media giants—skepticism was rampant. However, Hulu's evolution into a formidable player in streaming, integrating advanced ad tech and eventually producing original content, underscores the potential trajectory for Venu. To put some substance behind it, Hulu grew from skepticism to $40B in value. This comparison makes Venu more than just another streaming service; it is a strategic gambit by traditional media powerhouses to reclaim their influence in an industry increasingly dominated by tech giants. If Google or Amazon were to make an equally shrewd strategic move, either may as well throw its weight behind Fubo to ensure that Venu never sees the living daylight.