Light Reading
Two new research reports indicate that the US pay-TV industry finally hit the wall last year, as cable sub losses overwhelmed customer gains by telco and satellite TV providers.

Look Out Below: Pay-TV Posts First Yearly Sub Drop

Alan Breznick
3/19/2014
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For the first time in its history, pay-TV is looking like a losing proposition, as the US pay-TV industry lost more subscribers than it gained last year.

Two new research reports indicate that American pay-TV providers collectively lost as many as a quarter of a million video customers in 2013 as cable operators continued to shed millions of video subscribers. Although both telco and satellite TV providers continued to score gains last year, for the first time those gains were not enough to wipe out the big cable losses. (See Pay-TV Makes Small Gain in 2012.)

In a report released Wednesday, SNL Kagan found that pay-TV providers lost 251,000 video subscribers, despite posting a modest gain of 40,000 subs in the fourth quarter. The annual decline, which dropped the industry's total customer count to about 100 million subscribers, also came despite a modest rise in household formation, as the number of occupied units reached nearly 115 million by year-end. (See Pay-TV Adds Trailed Housing Growth in 2012.)

As usual, cable operators led the way down. Kagan estimates that US MSOs lost nearly 2 million video subscribers last year, including 388,000 in the fourth quarter alone, as customers either switched to telco or satellite TV providers or cut the video cord entirely. As a result, the cable industry ended the year with 54.4 million video subs, reducing its market share to 54%.

In contrast, the telcos gained about 1.5 million video customers last year, led by strong gains by both AT&T Inc. (NYSE: T)'s U-verse and Verizon Communications Inc. (NYSE: VZ)'s FiOS services. With these gains, the phone players boosted their collective total to about 11 million video customers, earning them an 11% market share.

The nation's two major satellite TV providers struggled much more for growth than the telcos, especially perennial also-ran Dish Network LLC (Nasdaq: DISH), as they focused more on retaining their highest-paying customers. But they still produced an overall gain of 170,000 video subscribers in 2013, thanks to sub increases for DirecTV Group Inc. (NYSE: DTV) and reduced customer churn rates for both operators. As a result, they ended the year with 34.3 million subscribers, giving them a 34% share.

The Kagan results are consistent with the numbers posted by Leichtman Research Group Inc. (LRG) last Friday. In its latest report on the US pay-TV sector, LRG found that the largest 13 pay-TV providers in the nation lost 105,000 video subscribers last year, reversing their gain of 175,000 subs in 2012.

Similar to what Kagan just reported, LRG found that heavy cable losses more than offset satellite and telco TV gains. The report said the top nine US MSOs shed more than 1.7 million video customers in 2013, a worse performance than the 1.4 million customers they lost in 2012. As a result, the nine MSOs ended the year with a total of 49.6 million subscribers, putting them below the 50-million mark for the first time in years.

In contrast, LRG reported that the top two telco TV providers, AT&T and Verizon, collectively added nearly 1.5 video customers in 2013, up from 1.3 million in 2012. The top two satellite TV providers, DirecTV and Dish, added 170,000 video subs, down from 288,000 the year before.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
3/20/2014 | 7:04:18 PM
Re: How bad is it
Hypothetically, we prefer to watch TV on the big TV in the living room.

Not that we would ever borrow someone's password anyway. Or download pirated content. Because that would be WRONG.
mendyk
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mendyk,
User Rank: Light Sabre
3/20/2014 | 2:20:36 PM
Re: Comcast
You are free to think as you like, right or (in this case) wrong.
Jessie Morrow
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Jessie Morrow,
User Rank: Lightning
3/20/2014 | 2:10:02 PM
Re: Comcast
@mendyk, I would not continue this argy-bargy if it were not very obvious that you take the opposite view of the Consumer Reports email, as you so well "advocated" here,

 Last I checked, though, access to the Internet and pay TV service is not an inalienable right. It's also not a mandatory obligation to purchase these services. And all of these services are provided by for-profit companies.

Is your gripe with corporate advocacy vs personal advocacy? If I had plagarized CR's email, deleted all mention of CR  and put my name on it rather than Jim Guest's would that have made it more acceptable?
SarahReedy
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SarahReedy,
User Rank: Blogger
3/20/2014 | 1:37:54 PM
Re: How bad is it
I am not sure, although most streaming services have the same loophole. I imagine they'll get tighter with authentication in the future.
mendyk
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mendyk,
User Rank: Light Sabre
3/20/2014 | 1:28:31 PM
Re: Comcast
Understood, and the editor of this publication knows my position on this. There is no issue with thoughtful exchanges and differences of opinion regarding the effects of telecom industry developments on the consumer market -- there wouldn't be a telecom industry without consumers. I just don't see a point to advocacy posting here. Reprinting emails from Consumer Reports crosses a line for me.
Jessie Morrow
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Jessie Morrow,
User Rank: Lightning
3/20/2014 | 1:21:21 PM
Re: Comcast
@mendyk, among the  posts on this subject DOShea brought up the topic of the Comcast/TWC deal, no one seemed to object at the time, the topic was now open & on the table, and I threw my 2 cents in. Granted if this were a presentation before the Supreme Court you might have a point. But this is not the first time consumer issues have appeared here nor will it be the last.
Jessie Morrow
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Jessie Morrow,
User Rank: Lightning
3/20/2014 | 1:08:32 PM
Re: How bad is it
Sarah, don't feel badly you are not the only one with thoughts of Content Theft dancing in your head, just recently a relative admitted doing the same. And it's so very obvious so why has HBO left this unfilled loophole?
mendyk
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mendyk,
User Rank: Light Sabre
3/20/2014 | 1:06:06 PM
Re: Comcast
It is a consumer issue. But this isn't a consumer-oriented message board. Of course Consumer Reports has an issue with rising cable and Internet access fees, and since we all are consumers of one sort or another, we all have these issues. Last I checked, though, access to the Internet and pay TV service is not an inalienable right. It's also not a mandatory obligation to purchase these services. And all of these services are provided by for-profit companies.
SarahReedy
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SarahReedy,
User Rank: Blogger
3/20/2014 | 12:43:27 PM
Re: How bad is it
Not that I would ever do this...but, "borrow" a friend's HBO Go password, and you're all set to watch it on your iPad!
Jessie Morrow
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Jessie Morrow,
User Rank: Lightning
3/20/2014 | 12:30:23 PM
Re: Comcast
Apparently Consumer Reports considers this to be a consumer issue as do I. I'd be interested in hearing from you why you think otherwise.
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