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US Pay-TV Subs Renew Plunge

Alan Breznick
8/15/2014
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After a brief respite in the last two quarters, the US pay-TV industry is shrinking again, albeit at a somewhat slower pace than a year ago.

In its latest report, Leichtman Research Group Inc. (LRG) calculates that the 13 largest US pay-TV providers, representing 95% of the total video market, collectively lost 300,000 video subscribers in the second quarter. That more than wipes out their gain of 260,000 subs in the first quarter.

The good news for the pay-TV industry is that the video subscriber losses represent its lowest in four years in the traditionally weak spring quarter. Last year, for instance, the industry shed 350,000 video customers in the spring.

The LRG results gibe with what Craig Moffett, a principal and senior analyst at MoffettNathanson, found in a similar report last week. Moffett also found that cord-cutting slowed to "a crawl" in the second quarter, dropping to an annualized rate of 400,000 households a year. (See Cord-Cutting Slows But Danger Still Real – Moffett .)

In another good sign for pay-TV operators, the industry has actually gained 20,000 video subscribers over the past year, noted Bruce Leichtman, president and principal analyst of LRG. That contrasts with a cumulative loss of about 70,000 subs over the previous 12-month period.

The bad news, of course, is that the industry continues to shed video subscribers by the hundreds of thousands in its worst quarters, virtually wiping out any gains that it makes in its best quarters. Plus, many of the top 13 providers, particularly the cable operators, continue to lose video customers throughout the year.


For more of Light Reading's coverage of pay-TV trends, visit our video services content channel.


As usual, the cable industry suffered the worst losses, shedding 510,000 TV customers during the spring. While the nine largest cable operators still have the most video subs, they have fallen below the 50-million customer mark for the first time, giving them slightly more than 50% of the 95.5 million-sub market.

Although some of the other major MSOs lost far more subs in the quarter, Cable One Inc. took the biggest proportional hit. The nation's ninth-largest cable operator lost 34,254 video customers in the second quarter, representing 6.5% of its total base. LRG noted that this was the highest percentage loss in a single quarter by any top pay-TV provider in the past decade.

Moving on to the satellite TV sector, DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH) lost a combined 78,000 video subscribers in the second quarter, an improvement over their loss of 162,000 subs in the prior-year period. The two satellite TV providers ended the quarter with a collective 34.3 million customers, giving them at least 35% of the market.

The two biggest telco TV players, AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), continued to make inroads in the pay-TV market, picking up a combined 290,000 video subs in the quarter. But the gain represented a decline from their year-ago pickup of 373,000 subs. The two telcos ended the quarter with a combined 11.3 million video subs, giving them about a 12% market share.

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

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mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
9/5/2014 | 2:05:09 PM
Re: OTT plunger
Hmm. I'm wondering when video game rendering will be easy and real-time enough so that someone could actually watch an animated version of a live NFL game while listening to the radio... and maybe not really tell a big difference between it and the TV broadcast. It's not quite a Turing test... but... it'd be interesting.
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
9/5/2014 | 2:01:37 PM
Meanwhile...
There seem to be a bunch of OTA DVRs launching... making it even easier to cut the cord and still get quality TV shows from broadcast networks.

But I've yet to find a great OTA antenna that makes getting optimal signal as easy as screwing in a coax cable... 
MikeP688
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MikeP688,
User Rank: Light Sabre
9/4/2014 | 11:10:50 PM
Re: Broadband
Yes Sir..that's correct.....as epitomized here:

http://support.roku.com/entries/22287264-HBO-GO-Help
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
9/4/2014 | 5:24:32 PM
Re: Broadband
MikeP688 - As I understand it, HBO to Go requires an HBO subscription. 
MikeP688
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MikeP688,
User Rank: Light Sabre
9/3/2014 | 1:16:35 PM
Re: Broadband
Well, there is always HBO ON THE GO that is available on ROKU..and it includes Newsroom (which I was fascinated with when I saw the first episode).   The idea is choice--and I hope to see such choices ever more....As I am working away, I am watching Israel 24 live from Israel on my laptop--things are changing--and ever so fascinating. :-)    
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
9/3/2014 | 1:09:01 PM
Re: Broadband
MikeP688 -  "ROKU has over 1,000 Apps to choose from.   Why pay $ 120/Month when you can probably cut it at least by a half?"

We struggle with that question for ourselves. The answer is that there are some things you still need cable for: GAME OF THRONES, NEWSROOM, and BOARDWALK EMPIRE to name three. 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
8/18/2014 | 12:45:14 PM
Re: OTT plunger
Football season is back, and I am again reminded why cable is important to some subscribers.

I don't have cable, and that means I am missing out on games and news at home. Of course, I can also listen to radio and be productive working on other things at the same time.

Sometimes, that's more effective for me personally – and it leverages the internet for free radio. 
MikeP688
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MikeP688,
User Rank: Light Sabre
8/17/2014 | 11:33:12 PM
Re: Broadband
One indication of the long-term viablilty of their staying power was my 13-year old.   He spends more time watching YouTube than anything else.   One more indication is ROKU.   ROKU has over 1,000 Apps to choose from.   Why pay $ 120/Month when you can probably cut it at least by a half?    
KBode
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KBode,
User Rank: Light Sabre
8/16/2014 | 10:49:13 AM
Re: Broadband
Harkening the inevitable harder shift toward usage caps to make up for slowly eroding TV and digital voice revenues, to be sure...
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
8/15/2014 | 4:01:08 PM
Broadband
Interesting: Cable companies are now selling more broadband than TV, according to Re/code.
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