Why did the Pac-12 partner with a video streaming service you haven't heard of?

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Last week, the Pac-12 announced a new distribution partnership with a streaming company. Given the league’s well-documented difficulties with distribution, any new agreements with any new companies are going to attract attention.

But last week’s announcement wasn’t with say, YouTube TV, or Apple TV, or Netflix, or any other major player in streaming. It was with a company called Vidgo.

I had never heard of Vidgo. None of my coworkers had heard of Vidgo. And the most common response to the news on Twitter was some variation of “what the hell is Vidgo?”

That’s a good question, right? So I asked. I called up Vidgo Chief Strategy Officer Zee Rahim, and Henry Watson, VP of Distribution and Partner Marketing at the Pac-12 Network, to figure out what all of this was about.

There’s a pretty good reason why you probably haven’t heard of Vidgo

Vidgo isn’t exactly a brand new company, but Rahim told me they only launched English streaming packages in December. The company also offers a streaming package of Spanish-language television, which includes sports channels like BeinSports, TyC Sports, ESPN Deportes, and Fox Deportes. The Pac-12 does not currently offer Spanish language programming.

“The fact that people don't know who we are…that's that's not surprising at all. We're still working on building the brand and brand awareness.”, Rahim told me.

So what makes VidGo different from the slew of other streaming companies? Rahim said there are two main differentiators.

The first is the idea of Social TV, which, as I understand it, seeks to provide a similar experience to watching a game with a second screen open to Twitter, or perhaps a group chat with friends. Users would be able to send memes, chat with friends, vote in polls, all from within the same app.

Rahim adds that in the future, some of these chats will be moderated by various celebrities. So perhaps you could watch The Bachelor, and then chat with a former Bachelor contestant, or watch a Pac-12 Network event with a former Pac-12 athlete.

The company didn’t anticipate Social TV would be ready at launch, and so neither the Pac-12 Network or Vidgo could comment on specific Pac-12 personalities, or how the two sides might work on social TV programming during Pac-12 events, at least right now. But that functionality could exist later.

Vidgo also might reach a demographic that most other streaming companies miss

Generally, when you sign up for a service like Sling, or AppleTV, you need a credit card. And lots and lots of potential consumers don’t have credit cards, or even bank accounts.

Vidgo has a relationship with tens of thousands of prepaid wireless phone stores, so when a customer goes in to pay their phone bill, they can also prepay for their streaming TV services. So it would make sense for a company like Fox or ESPN, if they were trying to reach as many people as possible, to work with a company that was positioned to reach those customers. You can still pay for Vidgo with a credit card, but you don’t have to.

Rahim estimates there are “somewhere between 20 and 40 million of these Cord Nevers”, or individuals who have never subscribed to a multichannel video service, out there. If Vidgo can break into that market in a meaningful way by providing a new way to pay, you can understand why many channels would be interested.

That’s probably why the Pac-12 isn’t the only conference to have a network available on Vidogo. Their basic package doesn’t just include ESPN, ESPN2, FS1 and other basic sports channels, after all. It also includes BTN, the SEC Network, ACC Network, ESPNU, the Longhorn Network, and Stadium, along with a few other sports channels. I think the CBS Sports Network is the only channel that regularly airs FBS football that isn’t part of the package.

Okay, but what about the money?

Both Vidgo and the Pac-12 Networks declined to go into specific detail about the financials of the deal, no matter how politely I asked. But Rahim did tell me how a generic deal between a TV channel and streaming company might look.

“One of the things that you do is you create a market guarantee. So you (the streaming company) tell them (the channel) how many subscribers you expect to achieve within one year, two years, three years. Then they say, okay, based on that, you're going to pass a minimum guarantee of X number of dollars each year. And then if you fall short of your subscriber numbers, you still have to pay them, whatever you promised to pay them. And then beyond that, you're paying, depending on the quality, you're paying a couple of cents to a couple of dollars per channel.”

I have no idea if the Pac-12 set up a deal following that general principle or not, but it would explain, theoretically, why an established channel or property might want to work with a newer, less established streaming brand. If the streaming company is correct, you got in on the ground level with a company that has some unique tech and reach with an entirely new demographic. If they’re not correct, well, you got a guarantee and you’re still getting a check.

Vidgo’s basic package costs $39.99 a month, which they claim is currently the cheapest streaming option that includes ESPN and Fox. The Plus Plan, which includes the Pac-12 Network regional streams, is $49.99 a month.

The Pac-12 also reads your tweets

The network knows this deal probably won’t assuage fan concerns over distribution. There are other ways to watch the Pac-12 Network if it isn’t a part of your regular cable package, like on Sling, or Fubo, but the conference is certainly aware fans would like other options.

Watson told me that his job is “to look at every distribution opportunity”, and that they “are in contact with every other streaming platform out there. And negotiating with them the same way we negotiate with any of our current partners.” Watson added that he couldn’t say that any new deals would be announced between now and football season, but that the league is actively working on them.

If nothing else, I at least intellectually understand why the Pac-12 did this

Should a consumer use Vidgo? I couldn’t make a recommendation. I assume that most consumers will care much more about the quality of the stream than the functionality of Social TV, and only time will tell how well Vidgo holds up for broadcasts with lots of users. Will there be lags? Crashes? Will the app play well on all devices, and continue to evolve? Those are pretty important questions.

My gut tells me that competing against Twitter as a social companion app for live sports (or award shows, sitcoms, etc) is going to be pretty difficult.

I assume that this deal, like most streaming deals, won’t provide life-changing money for any Pac-12 athletic departments, or dramatically change the experience for most current fans. But I can at least intellectually understand what made Vidgo a potentially attractive partner.

And hey, maybe understanding that might help make some Pac-12 fans feel better.

Not a lot better. But maybe a little bit.

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