When Philo launched its streaming TV service in 2017, it stunned the industry with its ultra-affordable subscription plans. Earlier this year, however, Philo had to drop its cheapest plan. The company’s CEO Andrew McCollum spoke with Flixed about Philo’s plans to create innovative TV experiences through on-demand and social features.
Note: Our interview with Andrew was long enough that we decided to produce more than one article from it. Read about the surprising aspects of Philo’s popularity. Or learn about Philo’s alliance with the cable industry.
Content Costs Force Philo Subscription Change
Philo entered the streaming market two years ago with surprisingly low-priced subscription plans. Achieving what was, at the time, an industry-low $16 per month price required taking a fresh approach to TV streaming. Rather than reproduce the full cable experience like bloated packages that rely on TV streaming guides, Philo passed on the sports networks, news channels and national broadcaster stations. These are the channels whose steep licensing fees have forced DirecTV Now and others to keep raising their prices.
Like these other companies, McCollum explained, Philo was “not immune to the dynamics felt across the industry. Generally, the price of content goes up every year. There are increases built into the contracts that are unavoidable.”
After a year of watching its competitors raise prices, Philo had to make its own changes. Philo went from offering a $16 plan and a $20 plan to only offering a $20 per month subscription. With an expanded 58-channel lineup, McCollum felt that the higher base price would still appeal to customers. “We really want to make sure that the package of content you’re paying for is a good deal regardless of what the price is.”
Existing customers were grandfathered in at the original rates and are free to change their plan at any time.
Philo Explores Enhanced On-Demand Options
Price, however, isn’t the only aspect of the service that appeals to Philo’s customers. “We obviously feel that price and value hopefully will continue to be a differentiator for us,” McCollum said. “We put a large premium on providing a great experience in the products we offer and building the technology to support a stable, reliable viewing experience.”
Philo develops most of its technology and product features in-house, but bases its work on customer-centric priorities. Following that approach, Philo is considering potential features that could let people watch TV in new and unique ways.
“We think it’s really interesting to look at ways we can, say, offer [video on demand] content but do it in a different way,” McCollum said. “Can we give you options to bundle some of these [streaming video on demand] services together so you can get a lower price? Can we give you access to a [streaming video on demand] library but give you a linear experience around it?”
Making the TV Experience More Social
A new way to watch on-demand content is not the only way Philo hopes to change the TV-watching experience. From the day Philo launched, McCollum and his team have talked about making the TV experience more social. “If you look at social you can kind of think about two broad categories,” McCollum told Flixed. Besides public sharing through social networks like Facebook and Twitter, “there’s what I would call this more personal social experience which is direct sharing with small groups of people. This is part of the TV experience that just doesn’t exist right now.”
The Philo team envisions a future when you could “see that your friends are watching the same show as you to synchronize your viewing, to watch it together, even if you’re in other places.”
“I think the exact form this stuff takes, it’s going to be a long journey, McCollum said. “We want to go carefully and create things that people are really enjoying and engaging [without] overwhelming people with a bunch of stuff that they aren’t sure how to use.”
Changes to Subscription Plans
Flixed: Over the past couple of years, rising licensing fees have caused everybody to start raising their prices. Philo finally had to change its price structure earlier this year. Why did you decide to do it the way that you did?
McCollum: We think a lot about how we could give the best value to our subscribers. It really drove how we chose to launch the service in the first place. You mentioned price, and price is part of it, but we really want to make sure that the package of content you’re paying for is a good deal regardless of what the price is. It might be that it’s not the lowest but, if what you get is really compelling for the amount you’re spending, then that’s what we’re going for.
After we launched, we watched essentially every other company in our space raise their prices — sometimes multiple times. These services are not immune to the dynamics felt across the industry. Generally, the price of content goes up every year. There are increases built into the contracts that are unavoidable. That’s a challenge we all have to face.
We wanted to stay true to that idea that we started with. We originally had two packages, our $16 package and our larger $20 package. Rather than raise the price across the board, we just moved to offering only the $20 package.
In some sense, it increases the minimum price that people can pay to subscribe to Philo but you’re getting more channels at $20 than you would have gotten at $16. Unlike some other services, we allowed anyone who was on our current plans to keep them and, in fact, they can switch back and forth between our former $16 package and our $20 package even after we made that switch.
We tried to approach it in a really consumer-friendly way. That’s our approach with everything and will be our approach in the future. We are committed to trying to fight as hard as we can to make sure our customers are getting the best deal possible. I think there are a lot of ways to do that but how we’ve approached it in the past is sort of a model for how we look at these things.
Flixed: You still have the same rough cost delta against your competitors. However, the customer perception of value at $16 is different than it is at $20. As costs rise in the future, that value perception could continue to erode. How will Philo continue to differentiate itself from its competitors in this environment?
McCollum: I think there is a bunch we can do to continue to differentiate ourselves. A lot of that comes down to that idea I was talking about how we think about pricing applies to everything we do.
We invest a lot in having really great customer support, we built almost all of the products that we’ve launched internally, we’ve developed almost all of the technology internally.
We really put a large premium on providing a really great experience in the products we offer and building the technology to support a really stable, reliable viewing experience. A lot of people use other virtual cable services and they just are not reliable. They crash or the streaming quality isn’t good, it buffers or its slow.
We really don’t see people lodging those complaints about Philo. We care really deeply about trying to make sure the quality of the experience is really good.
And then there’s other things we’re doing. We’ve been working on features to make the product more social. We are launching interesting things around letting you control Philo from other devices so you can use your phone as a remote for your TV. I think there’s a lot that we can do along those lines to make the basic experience of using Philo really good.
And then finally, I do think we’ll expand the content offering on Philo. We think it’s really interesting to look at are there ways we can say offer [video on demand] content but do it in a different way.
Can we give you options to bundle some of these [streaming video on demand] services together so you can get a lower price?
Can we give you access to a [streaming video on demand] library but give you a linear experience around it?
So there’s a lot of things we can continue to do to differentiate Philo, we obviously feel that price and value hopefully will continue to be a differentiator for us. There’s a bunch of other areas where we spent a lot of time trying to take a different approach as well.
Flixed: How would the social experience through the Philo app differ from what people do now with Twitter and Facebook?
McCollum: If you look at social you can kind of think about two broad categories. One is what I would call social media, which would be like posting publicly on Facebook to large groups of people. And then there’s what I would call this more personal social experience which is direct sharing with small groups of people. This is part of the TV experience that just doesn’t exist right now.
If you want to have a public conversation around content, Twitter is probably a good place to do it, probably the best option for you. If you want to share a show with your best friend or watch a show together with a few of your close friends, those are the kinds of experiences that just aren’t supported right now.
Those are the kinds of things we’re building. We already make it very easy to share content with other people. We have ideas about how we can make that even easier and better. The ability to see that your friends are watching the same show as you to synchronize your viewing to watch it together — sort of have a virtual watch party. Instead of just saying to your friend ‘Hey you should really watch Killing Eve on AMC’ you can actually send it to them and they can start watching it in a few seconds.
I think the exact form this stuff takes, it’s going to be a long journey. We believe that TV will be much more social than it is now but we want to go carefully and create things that people are really enjoying and engaging with not sort of overwhelming people with a bunch of stuff that they aren’t sure how to use.