Accelerating pay-TV subscriber losses point to OTT’s continued adoption

By Jim O'Neill on Aug 30 2016 at 6:15 AM
Accelerating pay-TV subscriber losses point to OTT’s continued adoption

Nielsen is using updated census numbers to apply a balm to the sting of subscriber defections for many cable networks like ESPN, but industry analyst firm SNL Kagan has no lotion that will sooth the sting of what it says was the worst quarterly losses ever for the U.S. pay-TV industry.

The firm says more than 812,000 subscribers cut the cord to pay TV, including 298,000 cable subs, 26,000 satellite TV subs and a whopping 488,000 subscribers to telco pay-TV services, which has lost more than 1 million subs since the middle of last year. Last year in Q2, total pay-TV losses tallied 291,000.

Kagan said that in the past 12 months, pay-TV providers have lost more than 1.4 million subscribers.

“It is a bit of an acceleration and the biggest quarterly loss that we’ve seen,” Ian Olgeirson, an analyst with SNL Kagan, said. “We are seeing a gradual increase in the decline rate.”

Online video services are playing an increasing role in the exodus, especially among Millennials who are watching more video on mobile devices than ever.

Dish Network has been hit hard by subscriber losses, but SNL Kagan believes its OTT service, Sling TV, now has as many as 764,000 subscribers. CBS chief Les Moonves, meanwhile, said its OTT services, CBS All Access and Showtime, each have more than 1 million subscribers.

Netflix, Hulu and Amazon Prime Instant Video all have contributed to the losses, as have an increasing number of smaller content providers that are going direct to consumer.

A study from J.D. Power last week found that consumer satisfaction with OTT providers was substantially higher than for pay-TV providers, yet another reason subscribers are leaving traditional pay-TV services.

Stay tuned.

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