Parks: 54% of U.S. Broadband Homes Own a Smart TV

It’s an over-the-top video world. So, it’s not a surprise that new data from Parks Associates June 24 finds more than 50% of U.S. broadband households own at least one smart TV, making the Internet-connected TV the primary platform for video streaming services at a time when content consumption is increasing dramatically.

Dallas-based Parks found that from Q1 2019 to Q1 2020, more than six million domestic broadband households cut the cord on their traditional pay-TV service, primarily transitioning to OTT services or broadcast TV via antennas for video content.

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The COVID-19 crisis further changed how households consume video from both a device and service perspective, and its impacts will continue even as states lift shelter-in-place orders, according to Parks. U.S. broadband households are consuming on average more than 20 hours of video content weekly on the TV, an increase of nearly 40% from 2017.

“Nearly one-third of U.S. broadband households cite a smart TV as their primary streaming video device, nearly double the rate of streaming media players and computers,” research director Steve Nason said in a statement. “When looking specifically at online video content, the smart TV is the only measured device seeing a year-over-year increase as the primary streaming video device,” Nason said.

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The analyst said smart TV continues to improve its perceived value to consumers across a variety of key features and technologies.

[The units] are steadily improving their scores in ease of navigation and ability to find content or discover new apps, supplanting other video devices in the house to become the main source for video content,” he said.

Parks said improved user features come at an important market inflection point, where consumers are watching more video at home while also cutting the cord on pay-TV, leaving them to search for content on their own, across multiple services.

“We’ve seen broadcasters incorporate smart TVs and connected devices more and more into their app strategy, and those that have are seeing a huge uptick in overall consumption and user engagement,” said Jonathan Laor, co-founder/CEO, Applicaster, which assisted Parks with the research. “Over the past few months we’ve also seen end users going to their mobile devices for subscribing to new services, and a dramatic increase in their consumption on TVs, making TVs the new champions of viewer retention.”

CFO: Comcast Looking at Near 400,000 Video Sub Loss in Q2

The NBCUniversal Peacock streaming video service can’t come fast enough. Comcast Cable is expecting the same quarterly pay-TV subscriber loss in the second quarter (ending June 30) as it had in Q1: more than 388,000 subscribers dropping service.

That’s projection Comcast Corp. CFO Michael Cavanaugh revealed June 16 during the virtual Credit Suisse Communications Conference.

“We’ve seen a lot of consumption of television, but a continued shift to streaming,” Cavanaugh said. “Our expectation is that the amount of spread [pay-TV sub losses] year-over-year will be about the same in the second quarter versus a year ago as it was in the first quarter.”

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Cavanaugh said the sub loss isn’t a surprise in light of ongoing consumer migration toward over-the-top video from the traditional cable bundle. He said the previous business model around channel bundles has been supplanted by high-speed Internet, data and video distribution.

“Today, we look at video as important because it’s a customer need and because we’re the broadband provider … helping in an ever more streaming world and helping customers navigate the video that they choose to buy,” he said.

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Cavanaugh said the days of forcing consumers to purchase bundles of content they may not watch are over.

“We’re not going to force it upon you if you don’t choose to see it that way,” he said.

To quell pay-TV drain, Comcast, through its cloud-based Xfinity platform, has pushed toward melding linear TV offering with over-the-top distribution such as Xfinity Flex, which enables subs to stream more than 10,000 free movies and TV shows, access services such as Netflix, Amazon Prime Video, HBO and Showtime, and rent or purchase movies and shows.

NBCUniversal launches its subscription/ad-supported Peacock streaming service nationwide on July 15.

“With impact on cord cutting, where we’re going with Flex in the cable business,” Cavanaugh said. “When combined with a voice remote, we think its very powerful, a platform attached to the broadband product.”

“I think there are a lot of pieces of our pre-existing [pay-TV] strategies and the momentum we had going into all this that I think is making us feel pretty confident in the future.”

Comcast reports Q2 results on July 30.

COVID-19 a Push to Cut the Cord

During the pandemic, consumers are sitting at home looking for more visual entertainment than ever before — and evaluating their options. Happily, the disc has gotten a lift as consumers realize the value of the stalwart format, while digital transactional retailers have gained in part by offering premium VOD titles that bypassed or left theaters early.

But, in addition to theaters, one entertainment option that may suffer from COVID-19 is traditional cable, satellite or telco pay-TV. A study from TDG Research found that as virtual MVPD services re-create the offerings of traditional pay-TV, consumers are increasingly seeing less of a need for it. “Most OTT pay-TV services now provide a full complement of both broadcast and cable channels” said analyst Michael Greeson.

Indeed, I am finding it increasingly annoying to sit through commercials on cable that last longer than ads on any AVOD offering and don’t include that convenient countdown to tell you when the torture will end. After scrolling through the numerous cable channels and finding absolutely nothing I want to watch, I am jumping to smart-TV options more and more. The family wants to cut the cord, and the time may be right.

As TDG noted, vMVPD leaders Hulu Live TV and YouTube TV offer the four major broadcast networks, channels that previously helped tie consumers to traditional pay-TV.

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It’s ultimately a flight to quality and value, the same things that have bolstered the transactional home entertainment business since its beginning.

Report: Post COVID-19, SVOD Use to Remain Strong

During the peak of the coronavirus pandemic, use of subscription video-on-demand services reached 56% in domestic homes. New data from TransUnion says that percentage should remain around 45% as economies and businesses re-open.

As consumers’ use of paid streaming services such as Amazon Prime, Hulu, Netflix and Apple TV increases, so too has the amount of time spent on the platforms. The report found daily use on platforms increased from upwards of two hours daily prior to the pandemic to an average upwards of four hours through May 18.

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More than 30% of consumers surveyed spent at least five hours daily streaming media. Among 18- to 29-year-olds, daily SVOD use skyrocketed 66%.

“The use of digital platforms has accelerated as younger generations seek more control and flexibility over how they consume content,” Matt Spiegel, EVP and head of the media vertical at TransUnion, said in a statement.

Spiegel said consumption is occurring across multiple channels and devices as consumers shift away from traditional pay-TV cable and broadcast.

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Consumers subscribing to three to five streaming services increased to 48%, up from 37% prior to COVID-19. Another 53% of survey respondents said they use a streaming service in place of a pay-TV bundle.

TransUnion found that Internet-connected televisions are the most popular streaming device with 37% of respondents. The 18–29 age group also preferred mobile devices (25%) for streaming while the 30–44 demographic had a preference for OTT devices (19%).

Older demos (60+) favored Smart TVs (41%), followed by desktop computers. However, streaming as a whole may still be a fairly new concept as 19% indicated they do not stream content at all.

“As more consumers leverage digital channels and look for entertainment options in the comfort of their homes, it’s important to take a pulse check as to how consumer behaviors are changing — and have changed since the onset of the pandemic,” Spiegel said. “These insights will be instrumental to advertisers as they adapt their positioning and targeting in the marketplace to create more relevant experiences.”

Cable TV Could Lose $1 Billion in Hidden Fees Revenue

Hidden fees on the typical pay-TV bill are the secret sauce that pad cable operators’ bottom line and state and local government coffers.

The average cable bill includes $37.11 worth of added monthly fees (excluding $13.28 in taxes) that aren’t part of the advertised package price, according to new data from KilltheCableBill.com. A separate report from Decision Data found the average domestic cable bill is about $217 monthly.

With nearly 600,000 video subs canceling service in the first quarter (ended March 31), the report contends pay-TV operators lost more than $22 million in revenue per month, which could result in $265 million for the year if cord-cutting trends continue. That revenue loss could skyrocket to $1.5 billion if video sub losses balloon.

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At the same time, the surge in over-the-top video platforms charging flat monthly fees of $15 or less continues. Netflix alone added more than 15 million subscribers in the quarter.

“The fact is that Q1 was devastating to cable companies, and I think that we’ll see when Q2 stats come out and a full quarter of quarantine has finished that the [coronavirus] pandemic just might be the final straw for cable TV as we know it,” analyst William Parker wrote in the report.

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COVID-19 Driving Cord-Cutting — at Online TV

When Dish Network launched Sling TV in 2015, it represented pay-TV’s answer to the pricey cable bundle and Netflix. Competitors such as Sony PlayStation Vue, Hulu with Live TV, DirecTV Now quickly joined the party. But the industry shine seems to be fading.

Speculation U.S. consumers quarantined in their homes would temporarily stem pay-TV cord cutting was dispelled with the industry’s largest first-quarter decline for traditional multichannel subscriptions. At two million, it was the largest quarterly drop to date.

New data from media research group Kagan estimates it was also the first quarterly decline for virtual multichannel alternatives. The broadband-delivered services collectively lost 261,000 subs or 2.8% to finish the quarter with 9.2 million subs.

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Gains from Hulu with Live TV and YouTube TV were erased by the declines from Sling TV and AT&T TV Now (formerly DirecTV Now) as well as Sony’s decision to shutter PlayStation Vue in January.

By comparison, subscriptions to traditional cable, direct broadcast satellite and telecommunications video services dropped 2.4% in the quarter.

As a result, Kagan updated its forecast for video market share in the U.S. due to mounting unemployment and the COVID-19 economic downturn. The revised projections suggest broadband-only households to surpass combined traditional and virtual multichannel subscribers. Indeed, online TV services have narrowed their cord cutter appeal and are expected to account for less than 10% of occupied households and reach nearly 11 million by the end of the year.

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Meanwhile, broadband homes are increasingly satisfying home entertainment needs through a combination of free and subscription-based streaming services, including adding 24.7 million subs by the end of 2020, accounting for more than 19% of occupied households.

“Home isolation should have stemmed multichannel defections, but the cruel irony of the interruption in programming and ensuing economic turmoil is expected to blunt the benefits,” Kagan wrote in a note. “We forecast an 11% drop in traditional multichannel subscriptions in 2020, and penetrations of less than 56% at the end of the year.”

Verizon CEO: 800,000 Subs Can’t Pay Their Monthly Bill

Fallout from the economic shutdown across the country due to the coronavirus pandemic continues to reverberate with millions more filing for unemployment and not being able to pay their bills.

Verizon CEO Hans Vestberg, appearing May 14 on CNBC’s “Squawk Box,” said about 2.5% of the telecom’s subscribers (about 800,000) can’t pay their monthly bill.

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“The majority of them already had a credit history with us … and we saw some challenges for them to pay their bills [due to the pandemic],” Vestberg said.

The executive said there has been a slight improvement (“not substantial”) in the past two weeks as the economy slowly jumpstarts operations and customers feel less stressed meeting financial obligations.

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“At least it’s not going in the other direction,” Vestberg said. The telecom earlier this month inked a distribution deal with ViacomCBS’s ad-supported VOD platform, Pluto TV.

Last month, Verizon disclosed it lost 84,000 Fios TV pay-TV subscribers in the first quarter ended March 31. The loss, which mirrored ongoing secular changes within the premium television ecosystem, was up more than 52% from a loss of 55,000 subs in the previous-year period.

Pay-TV’s Silver Linings Playbook: Broadband

With pay-TV distributors continuing to hemorrhage subscribers by the boatload, the growing void is being supplanted by a burgeoning new market: high-speed Internet — a prerequisite to over-the-top video consumption.

The largest cable and telephone providers in the U.S. — representing about 96% of the market — added more than 1.16 million broadband Internet subscribers in the first quarter, ended March 31. That’s up from a gain of about 955,000 subs in previous-year period, according to new data from Leichtman Research Group.

Broadband additions in the quarter were 122% of those in Q1 2019 — the most in any quarter since Q1 2015. Broadband providers now account for about 102.4 million subscribers, with cable distributors accounting for 69.2 million broadband subs, followed by telecoms with 33.2 million subs.

Over the past year, there were about 2.75 million broadband additions — compared with about 2.63 million net broadband adds over the prior year

The top cable companies added about 1.23 million broadband subs in the quarter — 132% of the net adds for the top cable companies in Q1 2019. Cable broadband net additions were the most in any quarter since Q1 2007.

Telecom companies had a net loss of about 65,000 broadband subs in the quarter, compared with a net gain of about 20,000 subs in Q1 2019.

“With the onset of the coronavirus pandemic, there were more quarterly net broadband additions in Q1 than in any quarter in five years,” Bruce Leichtman, principal analyst for Leichtman Research Group, said in a statement. “Top cable companies performed particularly well, having the most net additions for cable broadband services in any quarter in 13 years.”

Germany’s Bundesliga Soccer to Resume on May 16

Germany’s Bundesliga professional soccer league is set to become one of the first sports organizations in the world to resume play on May 16. All remaining nine weekend games of the season will be played in empty stadiums for televised and streaming video audiences. The league has been suspended since March 13.

The German Football Association says the matches would run under strict health protocols, including requiring players have regular COVID-19 tests.

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Comcast’s Sky Deutschland will broadcast all games live in Germany and Austria. Pay-TV operator BT Sports has Bundesliga rights in the U.K. is reportedly considering broadcasting the games for free (with ads).

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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.