Ampere: ‘Low-Level’ Pay-TV Sub Growth Continues Despite Rampant Cord Cutting

With U.S. pay-TV operators shedding more than 2 million subscribers in the first quarter, new data from Ampere Analysis finds that worldwide pay-TV continues to grow — albeit slowly.

In a study representing 70 pay-TV operators representing about half of the world’s 1 billion pay-TV subs, subscriber totals increased 0.3% in Q1 than in Q4 2019, indicating that despite the challenging times facing the pay-TV business, and the threats from online competition, there is still at least some low-level growth — when including China.

When removing Chinese market leaders — China Telecom, China Mobile and China Unicom — there was a net decline of 0.7% in the quarter. This is an acceleration from the 0.5% decline seen in Q4 2019, and indicative of a worsening outlook for the pay-TV market outside China.

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Of the 70 companies followed, 42% saw growth in the quarter, with positive net additions of nearly 5 million subscribers. This was partially offset by the remaining 58%, which lost a total of nearly 3 million subs. The net effect was a growth of just under 2 million pay-TV subscribers in the quarter, according to Ampere.

Again, however, China continues to have a significant role in keeping the global pay-TV market buoyant. Outside mainland China, pay-TV operators in the rest of the world lost nearly 1.7 million net subs.
In fact, the trend outside China is worsening. In the same period 2019, the same group of companies lost 1.2 million net subs.

While U.S. cable and telecoms groups such as Verizon and Comcast saw significant net declines in subscriber numbers, they have been less badly hit by cord-cutting than their satellite rivals, including DirecTV and Dish Network.

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“Of the bellwether pay TV operators we’re tracking, U.S. groups represent more than half of those firms suffering net subscriber declines,” senior analyst Toby Holleran said in a statement. “But losses aren’t evenly distributed even here — IPTV and cable firms have shown more resilience as a consequence of their ability to better bundle communications and pay TV together, insulating themselves against the worst effects of cord-cutting.”

Pay-TV Lost Record 2 Million Subs in Q1

Another financial quarter, another 90 days of pain for the pay-TV market. The largest pay-TV providers in the U.S. — representing about 95% of the market — lost more than 2 million video subscribers in the quarter ended March 31, compared with a net loss of about 1 million subs in the same period last year, according to new data from Leichtman Research Group.

The top pay-TV providers account for 83.9 million subs — with the top seven cable companies having 45.2 million video subs, satellite TV services 24.1 million subs, the telephone companies 8.2 million subs, and Internet-delivered pay-TV services with 6.4 million subs.

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Satellite TV services lost about 1 million subs compared to a loss of about 810,000 subs last year. The top seven cable companies lost about 595,000 video subs compared 335,000 subs.

The top telecoms lost about 125,000 video subs compared to a loss of about 105,000 subs in Q1 2019. The top online TV services (Hulu + Live TV, Sling TV, and AT&T TV Now) lost about 320,000 subs compared to about 225,000 net adds in 1Q 2019

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“The record net losses were partly related to the impact of the coronavirus, but do not solely reflect consumers’ dropping services,” analyst Bruce Leichtman said in a statement. “Several providers cited a decrease in connects as a key component of net losses in the quarter, rather than an increase in disconnects.”

Pay-TV Pandemic: Record 2.33 Million Subs Lost in Q1

The steady drip of pay-TV subscriber losses has turned into a broken water main. New data from informitv finds that U.S. distributors lost a combined 2.33 million subscribers in the fiscal period ended March 31.

Pay-TV operators’ combined sub count fell below 75 million, down from 84 million during the same period in 2018. AT&T suffered the biggest losses, shedding 897,000 subscribers and an additional 135,000 AT&T TV Now subs, for a combined loss of over a million.

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Dish Network ended the quarter with 382,000 fewer satellite subs and 281,000 fewer for its Sling TV online television service. Comcast Cable lost 388,000 subs. It was its twelfth consecutive quarterly sub loss, with its total falling below 20 million for the first time in almost two decades.

Verizon Fios TV subs declined by 84,000, marking 13 consecutive quarterly falls, taking it down to 4.07 million, from a high of 5.86 million four years previously. Charter Spectrum lost 70,000 television subs, marking its ninth consecutive quarterly loss, down by over 400,000 in twelve months to 15.55 million.

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Altice, Mediacom and Frontier lost 97,700 television subs combined in the quarter, and a total of 372,600 over twelve months.

“This is the largest quarterly loss of television subscribers in the United States we have reported to date,” Dr. William Cooper, the editor of the informitv Multiscreen Index, said in a statement. “The coronavirus pandemic has contributed to this, but many service providers have been losing subscribers for some time. Notably, their newer online services are now no exception to this trend.”

The top 10 services for the United States in the Multiscreen Index now have 74.65 million television customers between them, accounting for 62% of television homes. Subscriber numbers are as reported by service providers, rather than analyst estimates. Cox Communications is not included in the top 10 as it does not report sub numbers.

“It is difficult to determine how far these [sub] losses can be attributed to economic conditions and how much to an accelerating long-term structural decline,” added analyst Dr. Sue Farrell.

AT&T Keeping DirecTV Cards Close to Vest

Dish Network’s Charlie Ergen may think it’s “inevitable” about a satellite TV merger with AT&T’s DirecTV, but AT&T COO John Stankey is keeping his cards close to the vest.

Speaking March 3 at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco, Stankey appeared open to industry consolidation while underscoring the strength of satellite TV’s rural customers.

Characterizing any merger as “a little problematic” due to regulatory issues, Stankey reiterated that the $48.5 billion acquisition of El Segundo, Calif.-based DirecTV in 2015 was always about securing video customers for future distribution technology, i.e. over-the-top video and high=speed Internet.

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“We will continue to offer satellite and DirecTV where it has a rightful place in the market, places where cable broadband is not prevalent, oftentimes, more rural or less dense suburban areas,” Stankey said. “We’ll continue to offer it for customers on a stand-alone basis, who find its superior content offering to be something that they wish to have.”

AT&T’s WarnerMedia Entertainment is about to launch subscription service HBO Max in May, while just-released AT&T TV (formerly DirecTV Now) bowed March 2.

“We’re really pleased with what we saw [with AT&T TV] … that we would be able to replicate how customers were receiving the product in the other markets that we would enter where we own facilities and are able to pair video with broadband,” Stankey said.

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Regardless, at the time of the 2015 acquisition, AT&T U-verse and DirecTV had a combined 26 million customers in the United States and more than 19 million customers in Latin America, including Mexico and the Caribbean.

Flash-forward to the end of 2019 and AT&T had 19.5 million domestic pay-TV subscribers, with another 13.3 million in Latin America. That’s a decline of 25% and 30%, respectively.

Wall Street analyst Craig Moffett contends regulatory issues shouldn’t be a problem for DirecTV and Dish as they were in 2002 when the Justice Department sued to block a deal, saying the merger would stifle competition and hurt consumers.

“Satellite TV was growing by leaps and bounds at the time. Now it is in free fall. That alone may be enough to settle the debate; sure, two would be better than one, but both are credible bankruptcy risks on their own. Heck, they’d be a credible bankruptcy risk even together,” Moffett wrote in Sept. 30, 2019 note.

He contends a merger argument could best be presented to regulators as an act of preserving pay-TV for rural Americans without access to high-speed Internet.

“[That] would be a reasonably persuasive one,” Moffet wrote.

 

Verizon Revamps Pay-TV, Internet Options

Verizon, which has a declining Fios TV subscriber base and scant over-the-top video options (except for free Disney+), Jan. 9 announced it is reorganizing Fios options to consumers for television and high-speed Internet.

The telecom’s customers can now mix Internet and TV plans to match their needs, with Fios Internet plans starting at just $39.99 per month. “Mix & Match” also eliminates annual contracts.

“Customers are tired of having to buy a bundle with services they don’t want to get the best rates, and then discover that those rates didn’t include extra fees and surcharges,” Frank Boulben, SVP of consumer marketing and products, said in a statement. “We’re putting an end to the traditional bundle contract and putting customers in control.”

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Indeed, Verizon is offering three broadband options: 100 Mbps, 300 Mbps and Gigabit Connection. For new subscribers who choose Gigabit, the telecom is including a free Fios Home Router featuring WiFi 6 technology, a $100 Visa Prepaid Card and a year of Disney+.

Consumers also get a free month of YouTube TV or the option to choose five Fios TV channels from almost 200 available networks, in addition to mainstays ABC, CBS, NBC, Fox, Telemundo and Univision.

Verizon lost 220,000 Fios TV subs in the third quarter underscoring ongoing secular changes how consumers are watching television in the home — notably the rise of over-the-top video options such as Netflix, Amazon Prime Video and Hulu, in addition to online TV platforms such as Sling TV, YouTube TV and AT&T TV Now, among others.

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Verizon, which lost $1 billion in the short-lived go90 mobile video app venture, ended the quarter with 4.2 million Fios TV subs. That compared to more than 4.4 million in the previous-year period.

Major Pay-TV Providers Lost More Than 1.7 Million Subs in Q3 2019

The nation’s largest pay-TV providers representing about 93% of the market lost about 1.74 million combined video subscribers in the most-recent fiscal period, compared with a net loss of about 975,000 subs in the previous-year period, according to new data from Leichtman Research Group.

Pay-TV now accounts for about 84.8 million subs — with cable companies having 46.1 million video subs, satellite TV 26.3 million, telecom 8.6 million, and online TV services 3.8 million.

Satellite TV lost about 1.14 million subs in the third quarter, compared with a net loss of about 725,000 subs in Q3 2018. DirecTV had record net losses for the sixth consecutive quarter, while Dish TV had fewer net losses than in any quarter since Q3 2014.

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The top cable companies lost about 410,000 video subs, compared with a loss of about 245,000 subscribers in Q3 2018. Top telephone providers lost about 210,000 video subs, compared with a loss of about 80,000 subs last year.

Online TV services Sling TV and AT&T TV Now added about 20,000 subs, compared with about 75,000 net adds last year.

“This marked the fifth consecutive quarter of record pay-TV industry net losses,” Bruce Leichtman, principal analyst for Leichtman Research Group, said in a statement. “AT&T, the leading pay-TV provider in the U.S., accounted for 79% of the net losses in the quarter compared to 30% of net losses in 3Q 2018. This change is largely the result of AT&T’s strategic decision to increasingly focus on retaining and acquiring more profitable subscribers.”

Comcast 21,403,000 (down 238,000)
Charter 16,245,000 (75,000)
Cox 3,900,000 (40,000)
Altice 3,223,400 (31,900)
Mediacom 729,000 (18,000)
Atlantic Broadband 312,555 (added 5,294)
Cable ONE 298,063 (10,430)
Total Top Cable 46,111,018 (408,036)

Comcast Q3 Video Sub Loss Balloons to 238,000

Comcast Cable Oct. 24 reported it lost 238,000 video subscribers in the third quarter ended Sept. 30. The company lost 95,000 video subs in the previous-year period.

The cable operator, along with other traditional linear TV distributors, continues to face secular challenges as consumers migrate away from the traditional cable programming package.

For the nine-months of the fiscal year thus far, the cabler has jettisoned more than 550,000 video subs, compared to 325,000 subs during the same period last year.

As a result of growing OTT consumption, Comcast Corp. unit NBC Universal is launching branded SVOD service, Peacock, early next year.

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Comcast added 379,000 high-speed Internet subscribers, up 13.4% from 334,000 net broadband additions in the previous-year period. The uptick in broadband subs didn’t go unnoticed at the corporate level.

“Cable had its highest third quarter broadband net additions in 10 years, which drove its best quarterly net additions in total customer relationships on record,” chairman/CEO Brian Roberts said in a statement.

Parks: Broadband Cord-Cutters Switching to Mobile Video

Broadband households in the United States likely to cut the pay-TV cord in the next 12 months are switching to mobile video, according to new data from Parks Associates.

The Dallas-based research firm said broadband households cutting the cord in the next 12 months watch more than six hours of video content on their mobile phone a week, compared to 2.5 hours among all domestic broadband households.

Parks said the market trends have spurred Comcast and Charter to introduce mobile services as a way to extend their service-based product portfolios.

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“Roughly 10% of broadband subscribers are likely broadband cord-cutters, with half of them highly likely to make the change in the next 12 months,” principal analyst Brett Sappington said in a statement. “Many are satisfied with their current provider overall, but these subscribers are aware of the other options available to them and could become actual cord-cutters if their current service does not continually meet their needs.”

The research notes that 66% of broadband households currently subscribe to a cable Internet service, 33% subscribe to DSL or fiber optic or use mobile data services. Verizon, AT&T, and Frontier are the largest providers of DSL and fiber-based fixed-line services.

“Potential broadband cord-cutters rely on their mobile devices for entertainment,” Sappington said. “They are significantly more likely to watch live video content via mobile, including live TV broadcasts and livestreaming, averaging an hour more per week each compared to average broadband households. As 5G mobile and 10G fixed broadband services start to deploy, the substantial performance improvements will be attractive to this segment of subscribers, which will drive many providers to match these offerings in order to achieve parity in competition and messaging.”

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.

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.”