Comcast Posts 543,000 Q2 Pay-TV Sub Loss as Offsetting Broadband Customer Gains Disappear

Comcast Cable reported a loss of 20,000 residential broadband subscribers in the second quarter (ended June 30), compared to a loss of 10,000 high-speed internet subs in the same period a year ago. The company ended the quarter with 29.8 million high-speed residential customers, the largest ISP provider in the country.

Comcast has always relied on broadband — the lifeline to streaming and digital distribution — to justify ongoing secular declines in linear television and pay-TV. That trend has slowly come to an end over the past several quarters.

While the company added 3,000 broadband subs in the first quarter (ended March 31), that paled in comparison to the 253,000 net additions in Q1 2022.

Comcast president Mike Cavanagh would rather focus on the 4.5% increase in average revenue per broadband subscriber, which helped drive broadband revenue up 4.4% to $6.37 billion.

“We’re the largest broadband provider … and we can effectively compete in wireless with a strong value-proposition to customers,” Cavanagh said on the fiscal call, adding that broadband features that include cloud-based X1 and Flex platforms.

“[This is] how we have been able to achieve near record levels of low churn, and grow ARPU consistently quarter after quarter,” he said.

Meanwhile, the nation’s No. 1 cable TV operator continues to hemorrhage legacy pay-TV subscribers — falling below 15 million subs for the first time. Comcast saw Q2 subscriber losses increase 4% to 543,000 from a loss of 521,000 subs in the prior-year period. The company ended the period with 14.98 million subs, down from 17.14 million subs last year, which represented a subscriber loss of more than 2 million over the past 12 months.

GlobalData: U.S. SVOD Revenue to Nearly Equal Pay-TV by 2027

The rise of subscription streaming video in the U.S. and the decline of pay-TV are about to intersect. Analysis from London-based GlobalData finds that annual SVOD revenue will nearly equal that of traditional pay-TV by 2027, marking a critical tipping point in the ongoing decline of cable and satellite TV, and the inability of online TV to offset that loss.

GlobalData suggests revenues from SVOD services such as Netflix, Prime Video, Disney+, Max, Paramount+, Peacock and Hulu are forecast to increase from nearly $47.6 billion in 2022 to $64.6 billion in 2027. At the same time, pay-TV revenue will drop from $88.5 billion in 2022 to less than $65 billion.

SVOD household penetration will increase from 260% to 312% due to  households subscribing to multiple streaming services. At the same time, legacy pay-TV U.S. household penetration rate will decline from 47% in 2022 to 33% in 2027.

“SVOD was already on an upward trajectory, but the addition of live sports programming is changing audience viewing habits even more, helping drive additional pay-TV cord-cutting,” Tammy Parker, principal analyst at GlobalData, said in a statement.

Just this month, the National Football League and NBCUniversal announced that the Peacock streaming service will air the first-ever exclusive live streamed NFL postseason game in January 2024, when it presents an NFL Wild Card Playoff.

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Meanwhile, GlobalData suggests there remains a silver lining for pay-TV. The monthly average revenue per subscriber (ARPS) will remain strong, increasing to $118.34 per month in 2027 from $113.49 in 2022, due largely to price increases. By comparison, SVOD providers will see ARPS reaching $12.79 monthly from $12.16 in 2022 — due largely to the increased use of ad-supported tiers, less expensive subscription plans with limited content, and monthly and temporary discounts.

“GlobalData expects Netflix to continue to dominate SVOD revenue market share, attracting about three times as much revenue as Prime Video, and twice as much as Hulu each year through 2027,” Parker said.

Study: Despite Subscriber Declines, Pay-TV Revenue Still Dwarfs OTT

Linear pay-TV may be in a freefall regarding subscriber losses, but the market still commands a strong pole position against over-the-top video distribution in access revenue, according to a new report from Convergence Research.

The report estimates that 2022 U.S. cable, satellite and telco TV access revenue declined 6% to $85.8 billion in 2022 and forecasts a 9% decline in 2023 (ARPU should grow 3%) and 13% in 2025.
Based on an analysis of more than 80 OTT services (more than 50 providers), led by Netflix, Disney/Hulu, HBO Max and Prime Video, the report projects that U.S. OTT access revenue will grow 21% to $62.7 billion in 2023 from $49.6 billion in 2022, with another 13% spike to $72 billion in 2025.
Convergence notes the OTT video revenue hike will be split between programmers and independents. Programmers face a complicated trajectory not only in terms of competition and profitability but in balancing linear and OTT programming, advertising, and theatrical distribution.  
U.S. OTT household penetration, subscriptions per household, and net OTT subscriptions continue to progressively see more moderate annual growth through 2025 — at about 50% of the 2020-22 growth.

“We estimate 2022 saw a decline of 7.37 million U.S. pay-TV subscribers, and we forecast a decline of 8.44 million TV subs in 2023; hence U.S. TV subscribers declined by 11% in 2022, and we forecast 14% in 2023 and 16% in 2025,” Convergence’s Brahm Eiley wrote in a post. 
The company estimates that at the end of 2022, almost 70 million U.S. households (over 53% of households) did not have a TV subscription with a pay-TV provider — a percentage that should increase to 72% of domestic households by 2025. 
The report finds that 3.2 million U.S. residential broadband subscribers were added in 2022 and revenue grew 6.5% to $84.8 billion.
“We forecast higher sub additions and slightly lower revenue growth for 2023,” Eiley wrote. “While cable continues to maintain the lions’ share of residential broadband subs, its annual share of net additions has fallen precipitously, a trendline we project will continue through 2025 due primarily to T-Mobile and Verizon.”

Hub Research: Consumers Eyeing Fewer TV Entertainment Sources

For the first time in five years, consumers are reducing the number of TV sources they use in the home. New data from Hub Entertainment Research found that survey respondents on average dropped the number of video sources from 7.4 in 2022 to 6.4 this year.

The March/April survey involved 1,603 U.S. consumers with broadband, ages 16-74, who watched at least one hour of TV per week

The decline follows five consecutive years of growth, which saw TV sources increasing from 3.7 to 7.4 from 2019 through 2022. The decrease represents a relative decline of 14%. Although the causes for the drop are varied, it is likely inflation and perceptions about the economy that are the primary reasons, according to Hub.

Notably, the data found that fewer respondents have a subscription streaming subscription this year, with market penetration declining from 89% to 82%. Legacy pay-TV market penetration dropped from 62% of respondents to 55%. Online TV consumer penetration showed no significant change.

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In 2022, half (50%) of survey respondents reported having three or more subscriptions among Netflix, Hulu, Prime Video, HBO Max and Disney+ in 2023, this has dropped to 42% of respondents.

Meanwhile, use of free ad-supported streaming TV (FAST) services remained steady year-to-year, showing no significant decline from 2022 to 2023. FAST services such as Tubi, Pluto TV, Shout! Factory TV, Crackle and Amazon Freevee are increasingly important to consumers who are tightening their belts in the face of inflation woes and dire forecasts about the economy, according to Hub.

“Booms don’t last forever, and inflation and economic worries may have finally slowed the roll of consumers looking to stack traditional and streaming subscription TV services,” David Tice, senior consultant to Hub and co-author of the study, said in a statement. “However, FASTs have maintained their momentum this year;  in a time of economic uncertainty, ‘free’ is a powerful differentiator.”

Comcast Lost 2 Million Pay-TV Subscribers in 2022, Broadband Sub Growth Cools

Comcast’s legacy cable pay-TV business continued an industrywide trend, losing 2 million subscribers in 2022, up from a loss of 1.66 million subs in 2021. The company ended last year with 16.1 million pay-TV subs, which was down about 11% from 18.2 million subs at the end of 2021.

The pay-TV subscriber losses underscore consumers’ ongoing migration from linear TV to alternative video distribution such as Netflix, Disney+, Prime Video, HBO Max, Hulu and Peacock, among others, and free ad-supported streaming television (FAST) platforms.

To help deliver streaming video to consumer households requires high-speed internet service, or broadband. Comcast remains the nation’s largest internet service provider, ending 2022 with more than 32.1 million broadband subscribers.

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At same time, that tally underscored a cooling off of broadband sub growth. The company actually lost 26,000 high-speed internet subs in the fourth quarter (ended Dec. 31, 2022). That compared with a gain of 212,000 broadband subs in the previous-year period. Comcast attributed the sub losses to the impact of Hurricane Ian in Florida last September.

For the fiscal year, Comcast added 250,000 broadband subs, down 81% from a gain of 1.33 million subs in 2021.

The decline in video subscribers helped lower Q4 programming expenses almost 6% in the quarter, partially offset by contractual rate increases. Programming expenses dipped 2.8% for the fiscal year.

Verizon’s Fios TV Lost 339,000 Subscribers in 2022

Verizon Jan. 24 disclosed it lost 80,000 Fios TV subscribers in the fourth quarter (ended Dec. 31, 2022) to end the fiscal year with a decline of 339,000 pay-TV subs. The telecom, which lost 281,000 pay-TV subs in 2021, ended 2022 with 3.23 million Fios TV subs.

At the same time, Verizon added 56,000 high-speed internet subscribers to end the year with more than 6.7 million broadband subs, up 3% from 6.54 million subs at the end of 2021.

The telecom, which offers mobile subs free access to third-party subscription streaming services AMC+ and Disney+ (including Disney bundle with ESPN+ and Hulu), recently launched +Play, a new platform enabling subscribers easier access to third-party SVOD services, including Netflix.

“Wireless mobility and nationwide broadband will be two of the most significant contributors to our growth for the next several years,” Verizon CEO Hans Vestberg said in a statement.

EAO: More Than 33% of All SVOD Services Operating in Europe Are American

Of the more than 3,100 subscription streaming and over-the-top video platforms operating in Europe in 2022, more than 33% are U.S. based services, led by Netflix, according to new data from the European Audiovisual Observatory, part of the Council of Europe based in Strasbourg, France. Another 20% of all commercial pay-TV operators in Europe are American based.

In addition to the European Union countries, the data covered Albania, Armenia, Bosnia and Herzegovina, Georgia, Iceland, Liechtenstein, Montenegro, North Macedonia, the Republic of Moldova, Norway, Serbia, Switzerland, Turkey, the United Kingdom and Ukraine.

Among pay-TV distributors operating in Europe, the Walt Disney Company, has a virtual market dominance operating in 45 European TV markets.

Among SVOD services, Netflix uses a centralized strategy with a single country of establishment from where it is targeting the European markets, according to the EAO. A core hubs strategy is used by the BBC, where typically a small number of countries serve as a basis to target various national markets. AT&T, by contrast, applies a decentralized strategy where a larger number of establishment hubs serve the European markets.

Nine countries account for 96% of on-demand video services mainly serving non-domestic markets. Ireland, the U.K. and the Netherlands are the hubs for the most significant U.S. global streaming players’ base of operations.

Among U.S. media companies operating in Europe, Warner Bros. Discovery and its majority parent, AT&T, rank No. 1 in market share across pay-TV, VOD and streaming. Other U.S. firms in the top 10 include Google, Disney, Apple, Comcast, Prime Video, AMC Networks and Paramount Network.

Netflix doesn’t make the list since it is singularly focused on streaming only.

Leichtman: Pay-TV Operators Lost 785K Subs, Added 825K Broadband Customers in Q3

High-speed internet service is a gift that keeps on giving to pay-TV operators while video subscribers continue to decline.

New data from Leichtman Research Group found that the largest pay-TV providers in the United States — representing about 92% of the market — lost about 785,000 net video subscribers in the third quarter (ended Sept. 30), compared with a net loss of 650,000 subs in the prior-year period.

The top pay-TV providers now account for about 71.4 million subscribers — with the top seven cable companies having about 38.6 million video subscribers, other services (telecom and satellite) having about 24.8 million subs, and online services (i.e., Hulu + Live TV, Sling TV, etc.) having more than 8 million subs.

“Spurred by a strong quarter from [online TV] services, pay-TV net losses in 3Q were more modest than in the first two quarters of the year,” analyst Bruce Leichtman said in a statement. “Not including YouTube TV, which does not regularly report subscriber totals, [online TV] had nearly 900,000 net additions in the quarter. This was the third-most quarterly net adds ever for the top publicly reporting online services.”

The pay-TV subscriber losses continue to be mitigated by ongoing high-speed internet subscriber gains.

Leichtman found that the largest cable and telecom providers and fixed wireless services in the United States — representing about 96% of the market — added 825,000 net broadband subscribers in Q3, similar to a gain of about 820,000 subs a year ago.

These top broadband providers account for about 110.8 million subscribers, with top cable companies having about 75.6 million broadband subs, wireline phone companies having more than 32 million subs, and top fixed wireless services having about 3.2 million subs.

“Over the past year, fixed wireless services have accounted for nearly 80% of the approximately 3.26 million broadband subscriber additions,” Leichtman reported.

Hub: Live-TV Content Mounts Viewership Comeback — At Netflix’s Expense

Viewers in the U.S. increased their consumption of live-TV content in 2022, while streaming video remained unchanged from 2021, according to market data from Hub Entertainment Research.

Specifically, the Boston-based company found that 23% of survey respondents watched live television content this year compared with 21% last year. Streaming video viewership remained unchanged at 75%.

The survey was conducted in October among 1,602 U.S. consumers with broadband, age 16-74, who watch at least 1 hour of TV per week.

“The steady, year-by-year increase we’ve seen since 2016 for online sources as the home base for favorite shows has plateaued in 2022,” read the report. “On the flip side, the proportion watching their new favorite from an MVPD set-top box has increased.”

At the same time, perennial streaming behemoth Netflix’s status as the go-to source for online content continues to decline. The percentage of respondents who sourced Netflix for new content dropped to 29% this year from 35% in 2021, and 38% in 2020 during the height of the pandemic. Live TV content preference increased to 21% from 15% in 2021. Hub found that when excluding Netflix, viewership of Prime Video, Hulu, Disney+ and HBO Max increased 4% collectively to 25%.

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Hub says the preference gap between Netflix and pay-TV is eight percentage points, and 4 percentage points between the other SVOD services.

Driving pay-TV viewership is the fact that four of the Top 10 shows cited by respondents are available on pay-TV, including “Yellowstone,” “House of the Dragon,” “Ghosts” and “NCIS.”

“Content is king. Cliché or not, it’s clear from these results that viewers will happily go to whatever platform has exclusive rights to the most popular TV shows and movies du jour,” Peter Fondulas, principal at Hub and co-author of the report, said in a statement. “Over the past few years, those shows have been increasingly offered by streaming services. But as franchises like ‘Yellowstone’ and ‘Game of Thrones’ demonstrate, streaming does not have a necessary monopoly on buzz-worthy content.”

Viaplay Ups Global Pay-TV/SVOD Subs to 6.4 Million

Norwegian-based pay-TV/subscription streaming video distributor Viaplay Oct. 25 reported it ended the third quarter (Sept. 30) with 6.4 million global subscribers — up about 78% from the previous-year period when it had 3.6 million subs. The streamer, which includes limited operations in the U.S. through NBCUniversal and Comcast, added 879,000 subs in Q3.

The service topped 1 million subs in Poland and Holland. The addition of the English Premier League rights in Poland and the Netherlands contributed to the growth, together with the new distribution agreement in Poland.

Notably, Viaplay saw reduced sub growth in the Nordics, which has become a hotbed for U.S. streamers Netflix and HBO Max. Viaplay upped its year-end target for international subs to 2.7 million from 2.5 million, while reducing the Nordics subscriber forecast from 4.8 million to 4.6 million.

The overall sub target of 7.3 million remains unchanged.

“As a result of the immediate effects of the general economic slowdown on advertising and subscription sales, the lower than anticipated premium subscription sales in Norway, and the strategic decision to discontinue an unfavorable distribution agreement, we are reducing our full year Nordic organic revenue growth target by approximately 10%,” CEO Anders Jensen said in a statement. “Conversely, international sales are expected to exceed our previous expectations, and we now expect full year total group organic revenue growth of approximately 20%.

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