Q2 for pay-TV operators? With IPTV lifeline falling short, it will be dismal

By Jim O'Neill on Jul 28 2015 at 10:45 AM
Q2 for pay-TV operators? With IPTV lifeline falling short, it will be dismal

The second quarter is shaping up to be a dismal one for pay-TV operators who routinely see seasonal declines in their subscriber numbers as customers trim or disconnect from the services as spring moves into summer, or simply churn for better pricing.

But this quarter appears to be unique.

For the past few years the big declines cable and satellite operators experienced (down 431,000 for the “Big 6,” Comcast, Time Warner Cable, Charter, Cablevision, DirecTV and Dish last year) have been offset by big gains from AT&T U-verse and Verizon FiOS, which added 290,000 subscribers over the same period to their IPTV services.

That still left the biggest pay TV down some 141,000 subscribers in the quarter (some experts put the number as high as 340,000), but it was explained away as seasonal losses.

The picture this quarter already is looking very different.

While Comcast has been the only cable or satellite operator to report earnings, it was down 69,000 subscribers (which was still better than a year ago when it lost 144,000) both AT&T and Verizon also have released their earnings reports.

And, from a subscriber POV, it looks like the telco emergency button is disconnected this year. AT&T reported it lost 22,000 subscribers in Q2 and Verizon only added 26,000, a net of just 4,000.

There are a couple of major factors at work.

First, it’s generally accepted that when a new service like U-verse or FiOS (or Google Fiber and any competing cable operator) comes to town, they’re likely to gain about 5% of the market pretty quickly, a combination of being “the new kid on the block” and, often, of the loss-leader deals they’re willing to offer to attract new customers. And, they’re also likely to pick up customers who have just grown tired – or been pissed off by – they’re incumbent operator. Both telcos made hay in the early day as they came blasting into markets across the U.S. with a new TV product. But, they’re no longer that different, and certainly not that new.

Over-the-top is… and it’s attracting a growing number of fans.

As researcher GfK said in a recent study, an increasing number of cord cutters are discovering “I can watch it online.”

It’s cheaper, provides a similar experience, and has a number of other advantages as well.

With more than half of the biggest pay-TV providers yet to report their quarterly figures, there’s no guarantee operators will be turning to bicarbonates to soothe their troubled tummies… but I think it’s safe to say there’s already a lot of “plop, plop, fizz, fizzes” going on. You can chalk this quarter up in the quarter-million lost subscriber category, too.

Ouch.

Stay tuned.

Follow me on Twitter @JimONeillMedia and on LinkedIn

READ THESE NEXT

Data? A growing, critical resource for the pay-TV and OTT industry
Pay TV, OTT, Big Data
Data? A growing, critical resource for the pay-TV and OTT industry
Jul 25 2017 5:15 AM

Earlier this year, a survey of pay-TV providers by the Pay-TV Innovation Forum 2017 found that the majority of pay-TV execs believed data and analytics will be critical to pay TV direction over the next five years.

SVOD, Pay TV, Millennials, Cord Cutting
Q2 likely to be miserable as operators brace for big customer losses; OTT anyone?
Jul 24 2017 3:00 PM

Could second quarter pay-TV subscriber losses in the United States top 1 million, the highest figure ever? In a word, yes.

The second quarter routinely is a weak one for operators and in the current environment – remember the first quarter saw more than 800,000 subscribers cut the cord, according to Kagan – reaching one million may be an easy task.

Pay TV, Live sports, Millennials
A skinny bundle without sports? Duh
May 25 2017 10:30 AM

Skinny bundles from cable operators – and their OTT surrogates like Sling TV – are becoming more common as the companies try to look more attractive to consumers tired of paying for 200-plus channels when they really only watch a dozen or less. Survey after survey has shown that subscribers are hungry for not just a slimmed down offering but also for the subscription savings smaller bundles would engender.

Pay TV, SVOD, Millennials
Is cord cutting over? Far from it, and that’s creating new OTT opportunities
Mar 16 2017 1:15 PM

Has cord cutting finally run its course among U.S. operators who have, over the past five years, watched millions of subscribers walk away from traditional pay-TV delivery? Are Millennials – and their following generation, Gen Edge – ready to join Gen X and Baby Boomers in tying themselves to arcane and expensive contracts that deliver bloated tiers of content that they have little interest in watching, let alone paying for?

Nope.