TelevisaUnivision CEO Wade Davis Says ViX’s Free Tier Is Pivotal Against Churn, Not a ‘Promotional Front Porch’ for ViX+

Jennifer Maas
·5 min read

TelevisaUnivision CEO Wade Davis explained the key differences he sees in the strategy used for the company’s ViX streaming platform, which currently consists of a free, ad-supported tier and will add a subscription premium level later this year, and those utilized by larger streamers or ones who are looking to get into the hybrid model.

“Our market is very different,” Davis said during the TelevisaUnivision Q1 call with analysts Wednesday. “Our audience, both in the U.S. and Mexico and the rest of Spanish-speaking Latin America, consumes a much higher percentage of their television free over the air… Another important difference is the relatively low level of penetration of financial services, in particular credit and electronic payments. That is one of the things that has led us to a hybrid business model in which we have this massive, hugely valuable free, ad-supported tier that we have on the market right now.”

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At the end of January, the merger between Televisa’s media content and production assets and Univision was completed. The newly combined company promoted as a Spanish-language media and content powerhouse that will reach 100 million Spanish speakers across the U.S. and Mexico. On March 31, TelevisaUnivision launched AVOD service ViX, noting a premium subscription, ViX+, will arrive in the second half of the year. Last week, TelevisaUnivision reached a deal with Hemisphere Media Group to acquire Pantaya, a U.S. streaming platform for Spanish-language movies and TV series, snapping up the rival streamer to bolster the ViX service.

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During the TelevisaUnivision earnings call, Davis referenced “a lot of focus over the last couple of days as Netflix has announced they’re likely to introduce ads to their services,” noting that, “Netflix potentially doing that and the existing premium services that have some level of ad-support to them are very different than how we think about it.”

“The major differences is they look at ads as a way to buy down the subscription price — but it’s fundamentally against the same content stack, and all behind a paywall, just at different price tiers,” Davis said. “For us, we leverage our free, ad-supported tier as a standalone product which delivers huge value to our users and we’re happy for those users to always exist on the free tier, if they like it. We don’t use the free tier, necessarily, as a little promotional front porch where we’re trying to put a little bit of content out there to tease people to go behind the paywall. That said, having that massive, standalone valuable free tier does give us the opportunity to develop customer relationships with potential subscribers, better understand their content consumption patterns and does allow us a very powerful promotional platform, given that it’s inside the same product, to, in a very relevant way, promote to people what does exist behind the paywall that might be of value to them.”

Davis hopes this plan will help ViX not just acquire new subscribers, but avoid losing existing ones permanently. “When people churn out rapidly from the general market subscription packages and go back out into the wild, it’s hard for those people to get reactivated by those subscription services,” Davis said. “For us, by having this hugely valuable, free standalone tier inside of the same package, we’re able to do some very differentiated things with respect to churn management and reactivation because, in most cases, they’re just churning back out into our environment where we’re continuing to deliver value to them and continue to have a much more efficient way to talk to them, and ultimately reactivate them as subscribers as we bring on new content that may be relevant to them as a subscriber.”

TelevisaUnivision revealed its first-quarter 2021 financial results April 26, giving both “as reported” numbers for Univision solo through Jan. 31, and add in Televisa beginning Feb. 1 through the end of the quarter on March 31, as well as a set of “pro forma” numbers that are fully adjusted to include Televisa’s own results for the year-ago Q1 and the the current Q1 for “equivalent comparative purposes.”

Per the privately owned company, in the “pro forma” results, ad sales were up 12% in Q1 at $569 million versus $508 million. U.S. advertising revenue rose 14.3%, and in Mexico ad sales were up 7.3%. For the full year, Univision ad sales were up 22%, per TelevisaUnivision.

Meanwhile, subscription and licensing fee revenue was up 14.3% ($407 million vs. $356 million).

Overall, TelevisaUnivision total revenue for the quarter increased 12.2% over 2021’s Q1, when it was still two separate companies, in the “pro forma” calculations.

“Our first quarter of 2022 clearly demonstrated the great potential of our now combined company. We continue to move forward as the fastest growing media and entertainment company. We’re seeing fantastic results across the board, including ad sales and distribution revenue growing double digits, which makes us very optimistic about the rest of the year,” Davis said in a statement provided with the financials released April 26. “On March 31, 2022, we unveiled our streaming service, ViX, introducing our AVOD tier to tremendous excitement, and this is just the beginning. Our growth-oriented strategy is supported by ratings increasing 23% in the Univision network, the highest among all major U.S. networks. In Mexico, we further distanced ourselves from the competition with 60% market share of weekday broadcast. I am ecstatic to build upon this momentum with a world-class team that is already working as one.”

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