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

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.

Alan Breznick, Cable/Video Practice Leader, Light Reading

March 19, 2014

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

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

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like