The rate of pay-TV sub losses improved a smidge in the third quarter of 2024, according to MoffettNathanson, which sees potential in Charter's strategy to bundle pay TV with an array of direct-to-consumer streaming services.
The US pay-TV industry's rate of decline remains rapid, but there are signs of "a little moderation" as operators lost about 305,000 subs in the third quarter of 2024, for a cumulative loss of 4.3 million subs in the first nine months of the year, according to MoffettNathanson's latest Cord-Cutting Monitor report (registration required).
That quarterly loss (a rate of -6.6%), which includes both traditional pay-TV service providers and virtual multichannel video programming distributors (vMVPDs), improved from a year-ago loss of 537,000.
Broken down by segment, traditional pay-TV providers (cable operators, telcos and satellite) shed 1.64 million subs in Q3 versus a loss of 1.97 million subs in the year-ago period, dropping that total to 48.18 million. Cable took it hardest on the chin, losing 919,000 subs in Q3 2024, slightly better than a year-ago loss of 1.1 million.
Traditional pay-TV saw "(very) slight moderation" as the rate of decline inched up to -12.4% in Q3 2024 versus -12.6% in the year-ago quarter, MoffettNathanson analyst Craig Moffett wrote. "That's hardly something to celebrate. Still, it marks the first sequential improvement since the beginning of 2021 (!)."
Virtual MVPDs, led by YouTube TV's estimated gain of 800,000 subs in the period, added 1.33 million subs in Q3 2024, down slightly from a gain of 1.43 million a year earlier. vMVPDs ended the period with 20.33 million.
Moffett said he expects nearly half of all pay-TV subscriptions to be purchased through a vMVPD by 2029, "with YouTube TV reigning king in that space" (despite continued pricing increases). In the US, YouTube TV, with an estimated 8.95 million subs, trails only Comcast (12.83 million residential pay-TV subs) and Charter (12.43 million residential pay-TV subs).
Charter's pay-TV/streaming bundle 'just might work'
Though cable operators have struggled to trim back pay-TV losses, the analyst believes there's something to like about Charter Communications' strategy to bundle several direct-to-consumer (DTC) streaming services with its most widely distributed pay-TV packages and the operator's new "Life Unlimited," a convergence offering that involves video options alongside home broadband and mobile services.
Charter's plan includes bundles with ad-supported versions of Disney+, Paramount+, Vix, Max, Discovery+, Peacock, AMC+, Discovery+ and Tennis Channel. ESPN+ is now included with Charter's new "TV Select Plus" sports package. That approach is coming together as the Xumo Stream Box becomes Charter's go-to device for new video subs.
"It's too early to judge whether Charter's strategy will succeed; the full implementation of the idea won't be available to customers for another few months. But there's a good reason to believe it just might work," Moffett wrote. "We're not going to go so far as to predict that Charter's video strategy fully stanches the bleeding. But it would be a mistake to simply dismiss their offer as 'too little, too late.' We expect they will market their new offer aggressively. YouTube TV's new pricing will only help to set the stage."
Still, Moffett's pay-TV forecast continues to look grim, with no bottom in sight. He expects pay-TV subs to decline by 6% to 7% each year through 2028.
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