Kagan: Pay-TV Households Declining to 70.5 Million by 2023

The migration of U.S. consumers away from traditional multichannel pay-TV has been ongoing for the past decade and the shift is expected to increase moderately in the next 12 months, with several noteworthy accelerants contributing to long-term subscriber losses, according to Kagan, a media research group within S&P Global Market Intelligence.

While traditional multichannel video subscriptions has long been the top home entertainment choice for U.S. households, the loss of content exclusivity is expected to shift the consumer base towards over-the-top video services such as Netflix, Amazon Prime Video and Hulu, and fuel the growing ranks of online-only video households.

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At the same time, Kagan contends increased prices for broadband, coupled with a series of OTT price hikes are impacting subscriber growth in the virtual multichannel space – notably at DirecTV Now and Sling TV. However, the combined households relying on traditional and virtual multichannel services for video entertainment are still expected to account for the majority of occupied homes through 2023 with 64% of the market.

Indeed, Kagan projects total traditional multichannel subscriptions (including residential and commercial) will drop 16.4 million to 73.6 million. Traditional residential multichannel households (excluding commercial and overlap) will drop 15.6 million to 70.5 million.

Virtual multichannel households will increase 6.4 million to 13.5 million. Combined traditional and virtual multichannel will drop to 84 million residential subscribers. Online video-only (Sling TV, DirecTV Now, YouTube TV, PlayStation Vue, etc.) households will add 10.6 million subs to 25.2 million. Burgeoning over-the-air (OTA) digital antennae households will add 3.8 million households to 21 million.

Epix Coming to DirecTV and DirecTV Now

Epix, the premium TV network owned by MGM, and AT&T have reached a distribution agreement that will make Epix available on a subscription basis to DirecTV customers for $5.99 a month beginning May 19.

The network will also be available soon on the streaming service DirecTV Now, according to an Epix press release.

Terms of the agreement were not disclosed.

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“We are thrilled to expand our relationship with AT&T and make our growing slate of original programming and Hollywood movies accessible to viewers across the DirecTV universe,” said Michael Wright, president of Epix, in a statement. “It’s an exciting moment of growth for us as we build a brand that delivers a superior customer experience with high-powered, premium original series to a new audience on DirecTV and DirecTV Now.”

“AT&T has been a tremendous partner of ours over the years,” said Monty Sarhan, EVP and GM of Epix, in a statement. “We are extremely excited about launching on DirecTV and expanding Epix’s availability nationwide. This is an incredibly important platform for us and a truly momentous launch for our network.”

“We are pleased to add Epix to our vast content offering in the premium TV category. With its growing lineup of original programming, Epix is a great addition for our DirecTV customers,” said Dan York, senior EVP and chief content officer for AT&T, in a statement.

Epix will provide DirecTV subscribers access to the upcoming premieres of original series “Godfather of Harlem,” starring and executive produced by Forest Whitaker; “Pennyworth,” the origin story of Batman’s butler Alfred, from Warner Horizon and DC; “Perpetual Grace, LTD,” from MGM and featuring Sir Ben Kingsley; “Belgravia,” from Julian Fellowes; docu-series “Slow Burn,” based on the hit podcast;  and a weekly series, “NFL: The Grind,” from NFL Films. Epix also has original series “Get Shorty,” “Deep State,” “Elvis Goes There” and “PUNK” as well as more than 2,000 Hollywood movies.

AT&T Loses 544,000 Q1 Video Subs; Another 83K DirecTV Now Subs Depart

AT&T’s pay-TV and online TV businesses continue to reflect ongoing challenges as consumers migrate away from the traditional cable bundle toward an increasingly fragmented over-the-top video market.

The telecom April 24 reported it lost 544,000 pay-TV subscribers in the first quarter (ended March 31) — up 190% from a loss of 187,000 video subs during the previous-year period.

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AT&T ended the period with more than 22.3 million pay-TV subs, which includes satellite operator DirecTV and U-verse. That’s down more than 1.5 million combined subs from 2018.

Meanwhile, DirecTV Now — AT&T’s much-hyped standalone online TV service – lost 83,000 subscribers compared to a gain of 312,000 subs during the previous-year period.

The streaming service ended the period with 1.5 million subs compared to 1.46 million subs last year.

AT&T CEO Randall Stephenson attributed DirecTV Now sub losses to weaning out early subscribers paying the introductory $34.99.

‘We’ve seen the effect of that in the fourth quarter and the first quarter,” he said. “Second quarter you’ll see that moderate, and I actually believe second half of the year base of what we’re seeing in terms of uptake in the market on the new platform and the new product. We should have a decent second half of the year on DirecTV Now.”

Philo TV Ups Basic Subscription Price 25%

Online TV service Philo TV is ending its longstanding $16 monthly plan (with pay-TV 45 channels) for its $20 plan with 58 channels, beginning May 6 for all new subscribers.

Subscribers who join the service before May 6 and existing subs will not see immediate fee hikes to their basic plans but will instead be grandfathered into the new price point over time.

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CEO Andrew McCollum made the announcement in a post on the service’s website.

“Since we launched 18 months ago, most of the other companies in our space have raised their prices, in some cases multiple times,” McCollum said. “We didn’t want to do that. Still, when we looked at all of the costs of operating Philo — which increase over time — consolidating into a single $20 package was the best way for us to maintain the same offering we have today without raising prices for everyone or having to cut back in places we strive to excel, like customer support.”

The price hikes comes as Hulu with Live TV raised its prices, followed by Google-owned YouTube TV. DirecTV Now, Sling TV and PlayStation Vue have all raised basic subscription plan pricing in recent months.

Philo is also reportedly working on technology that would allow users to share links with friends and watch programming concurrently from different locations.

Doing so could elevate social media interactions between users – a driving point for user retention and marketing. While the app has been completed, McCollum said Philo is waiting to launch it.

“We want to balance creating more options with making sure people don’t feel like they’re being coerced into stuff they don’t care about,” McCollum told TechCrunch earlier this year.

 

Poll: 44% Say Netflix Vital Source of Video Content

While Disney rolls out its branded “Disney Plus” subscription streaming video service for investors, new data from Hub Research finds that 44% of consumers consider Netflix an important source of content.

The research firm’s “The Evolution of Video Branding” study found that the vast majority of respondents from a January poll of 1,692 consumers in the United States chose Netflix over other over-the-top video services for their video content.

Other entertainment sources include CBS (29%), ABC (28%), NBC (28%) and ESPN (24%).

Among younger respondents (16-34 years-old), 59% opted for Netflix, followed by Hulu (26%), ESPN (24%), HBO (17%) and Amazon Prime Video (17%). Among older respondents CBS ranked first with 41%, followed by ABC (37%), NBC (37%), Netflix (35%) and Fox (26%).

Notably, the report found that while respondents were familiar online TV services such as Hulu with Live TV, YouTube TV, DirecTV Now, Sling TV, and PlayStation Vue, 80% claimed they were unaware of what each platform’s value proposition was.

Indeed, among younger respondents, simply branding video content “original” was enough to make them consider streaming it. And 69% considered Netflix the best choice for original fare.

“It would be easy to explain Netflix’s strong position as a must-have TV source by citing the sheer variety of its content,” Peter Fondulas, principal at Hub and co-author of the study, said in a statement. “Then again, the same can be said of the variety of shows on broadcast networks. Whether it’s a function of a higher level of show quality or of strong branding — or both — Netflix has managed to set itself apart from networks that offer a similarly wide variety of genre choice.”

T-Mobile Launching Online TV Platform

T-Mobile April 10 bowed “TVision Home,” a rebranded version of Layer3 TV launching April 14 in Chicago, Dallas-Fort Worth, Los Angeles, New York City, Philadelphia, San Francisco, and Washington, D.C. metro areas, as well as Longmont, Co., with other markets coming later this year.

The platform bows at $90/month (including a $9.99/month discount for T-Mobile customers … but available to everyone for a limited time), which includes 150+ channels, local broadcast, regional sports and more. Plus $10/month per connected TV, including DVR for a limited time.

Premium TV packages – like HBO, Showtime and others – or transactional VOD and digital movie/TV show purchases are extra.

T-Mobile is joining a crowded online TV market created in 2015 by Dish Network’s Sling TV. Other players include DirecTV Now, PlayStation Vue, YouTube TV, Charter Spectrum Plus, Fubo TV, Hulu with Live TV, Philo and AT&T Watch TV.

T-Mobile, which inked a content deal with Viacom last week, said Netflix and other streaming apps will be available on the platform.

To generate buzz, the telecom is offering to pay off early contract termination fees for Dish and DirecTV customers, up to $500 via prepaid card, when they switch to TVision Home.

“Today’s news brings us one step closer to taking on big cable,” CEO John Legere said in a statement.

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TVision Home claims “the most” 4K channels as part of more than 275 available channels, 35,000 on-demand movies, TV shows in addition to on-screen social content, personalized home screen, 1 terabyte DVR storage, smart speaker voice control with Amazon Alexa or Google Assistant.

Apps at launch include Pandora, iHeartRadio, XUMO, CuriosityStream, Toon Goggles, HSN, Netflix, YouTube, YouTube Kids. T-Mobile will soon release a companion app for iOS and Android, allowing users to stream content to a smartphone anywhere in the house.

TVision Home is part of T-Mobile’s forward 5G strategy that starts with the Sprint merger – pending regulatory approval.

Claiming that almost half of the country’s households, and more than 76% of rural households have no high-speed service (100 Mbps average), T-Mobile claims that if the merger is approved, the combined company will have the scale and capacity to create a supercharged 5G network capable of reaching over half the country’s households with high-speed broadband by 2024.

“TVision Home is about so much more than home TV… it’s TV built for the 5G era,” said COO Mike Sievert. “With New T-Mobile, we’ll bring real choice, competition, better service, lower prices and faster speeds…right into your living room.

Law Firm Investigating AT&T for Allegedly Misleading Investors About DirecTV Now Subscriber Growth

A law firm specializing in filing litigation against publicly-held corporations, is seeking plaintiffs for a possible class action suit against AT&T regarding its standalone online TV streaming service, DirecTV Now.

The Law Offices of Howard G. Smith, in an April 2 press release, said AT&T in June 2018 issued nearly 1.2 million new shares of common stock following its $85 billion acquisition of Time Warner – which led to the formation of WarnerMedia.

At issue is AT&T’s registration statement accompanying the stock issuance that claimed DirecTV Now subscriber growth would offset ongoing subscriber declines at legacy pay-TV services DirecTV satellite service and AT&T U-verse.

Instead, after AT&T raised DirecTV Now’s monthly pricing from the promotional $39.99 fee to $49.99, subscriber growth reversed to sub losses – more than 250,000 DirecTV Now subs jettisoned in the most-recent fiscal period.

“On this news, shares of AT&T fell as low as $27.36 per share, a decline of nearly 16% from the $32.52 price per share on the exchange date for the acquisition, thereby injuring investors,” Howard G. Smith wrote in the release.

In a media statement, AT&T denounced the action.

“This is a carbon copy of a baseless suit filed in February,” said the telecom. “In both cases, the claims are wholly without merit.”

 

 

 

Report: Younger Demos Prefer Online TV

The rise in popularity of standalone online TV services such as Sling TV and DirecTV Now is largely due to age demographics, according to new data from Leichtman Research Group.

The firm found that found that 18-44 year-olds accounted for 71% of respondents from an online survey of 6,715 households in the U.S. that had online TV services, which included Hulu with Live TV, YouTube TV, Charter Spectrum Choice, Fubo TV and PlayStation Vue. Overall, 16% of adults ages 18-44 currently have online TV service – compared to 6% of adults older than 45.

Among current online TV subs, 43% transitioned from a cable, satellite or telecom pay-TV service, while 17% switched from another online TV service, and 15% were non-subscribers to any type of pay-TV service.

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The report also found that among Madison Ave.’s coveted 18-34 demo, 42% had online TV, 26% had traditional pay-TV and 33% had no pay-TV service.

Nearly 75% of online TV subs claimed to be “very satisfied” with their service, but 20% said they are “very likely” to switch to another online TV service in the next six months.

Among online TV subs, 93% also have an SVOD service such as Netflix, Amazon Prime Video and/or Hulu, compared to 71% of traditional pay-TV subs, and 74% of non-subs.

Notably, 78% of online TV subs consume the product at home, compared to 82% of HBO Now subs and 88% of Netflix viewers.

“[Online TV] services were first introduced about four years ago, and the market for these lower-cost [monthly] services is still growing and evolving,” Bruce Leichtman, president and principal analyst for LRG, said in a statement. “Consumers continue to experiment with the various services, along with other traditional and streaming options, to find the best combinations of video content and cost.”

 

 

NPD: Online TV Reaches 15% U.S. Household Penetration

Spurred by the influx of online TV services and connected TVs, direct-to-consumer channel adoption has grown three-fold over the last three years to reach 15% of U.S. households, according to new data from The NPD Group.

DTC video subs are defined as current subscribers to any à la carte TV channel that does not require a pay TV subscription from a cable or satellite TV provider. Excludes content aggregators such as Netflix, Hulu and Amazon Prime.

While nearly 87% of DTC subscribers say they are likely to add channels in the next year – doing so to replace linear pay-TV is not among the leading reasons why.

NPD conducted a survey Feb. 6-11, 2019 of 1,000 domestic consumers, aged 18+ from diverse regions and demographical backgrounds.

In fact, cord-cutting, or pay-TV subs looking to replace cable, ranks just 16th out of 20 reasonscited, according to the Direct-to-Consumer Video Online Study.

A majority of DTC subs (66%) do so in addition to the traditional cable or satellite TV bundle. Low cost to entry is driving adoption and that is the top reason cited for subscribing to à la carte TV channels, with the ability to subscribe only to the channels desired.

“It is imperative for players in this space to understand where consumers prefer to sign up,” analyst John Buffone said in a statement. “Consumers can now subscribe to only the channels they want and get the benefit of a single billing vendor and user interface.”

NPD said online TV market growth will come from both current subs adding channels and new subs. Looking at the combined group of current and prospective subs with a positive likelihood to sign up in the next 12-months, the most likely destination for subscribing to online TV is Amazon Prime Channels (31%), followed by the TV channel’s app (26%).

“[Online TV] aggregators such as Amazon, Roku, Hulu with Live TV, Sling TV, DirecTV Now, YouTube TV and PlayStation Vue, stand to gain a lot by garnering subscription revenue for managing [their] channel transactions,” Buffone said.

 

DirecTV Now Raising Prices, Changing Service Plans

Despite losing nearly 270,000 DirecTV Now subscribers in the fourth quarter (ended Dec. 31, 2018), AT&T is initiating a $10 monthly price hike for its standalone online TV service that takes effect in early April.

DirecTV Now is also changing service plan options for new subscribers to include Plus ($50 for 40 channels, including CNN, ESPN and HBO) and Max ($70 for 50 channels, including HBO/Cinemax, ESPN and regional sports networks).

The plans replace existing (wordy) options such as “Live a Little Plan” ($40) with 65 channels; “Just Right” ($55) with 85 channels; “Go Big” ($65) 105 channels; and “Gotta Have It” ($75) for 125 channels.

Existing subscribers will have their plans grandfathered in.

AT&T is also offering OTT streaming versions of its linear pay-TV packages, including “Entertainment” (65 channels for $93 per month); “Choice” ($110 and 85 channels); “Xtra” ($124 for 105 channels); “Ultimate” ($135 for 125 channels); and “Optimo Mas” ($86 for 90 channels).

As cord-cutting increases among consumers, AT&T hopes migrating linear TV subscribers to OTT distribution translates into more broadband subs. The company ended 2018 with 15.7 million high-speed Internet subs.