|For Q2 2019||Change|
|Cable, Satellite, Telco TV homes||88.3M||-5.4% (YoY)|
|Penetration of occupied homes||72%||-3% (6 months)|
|Homes without cable, satellite, telco TV||34.3M||+10% (6 months)|
First half 2019 pay TV losses heavy; the second half will be worse
(comments on Q2 2019 performance)
2019 pay-TV subscriber losses hit 3 million in the first half. A strategic shift and new market entrants will make heavier second half losses likely.
Pay-TV has lost 14 million homes from its peak
In the first half of 2019, cable, satellite, telco TV providers have lost just under 3 million subscribers. Since the industry’s 101.9 million peak in 2014, 13.6 million homes have called it quits on traditional pay TV.
With no broadband to help anchor customers, satellite has borne the brunt of the decline. DirecTV lost 1.32 million subscribers, and Dish lost 345,000 in the first half of 2019. Overall, 1.7M satellite customers (or 6%) have left their provider since the start of the year.
Cable has fared a little better. The top 7 providers have lost 0.8 million (1.7%) in the first half. Telco TV is down 2% over the same period.
Understandably, facilities-based pay TV penetration of US homes has fallen sharply this year. At the end of 2018, 74.6% of the 122.3 million[i] occupied U.S. homes had cable, satellite, or telco TV. At midyear 2019, occupied homes have increased about 300,000 (up 0.2%) while pay TV penetration has sunk 2.6%, to 72%.
vMVPDs not offsetting satellite losses
When DirecTV and Dish introduced the virtual MVPD services, total subscribers began to rise. In 2015, the total number of subscribers to Dish Network, DirecTV, Sling TV, and DirecTV Now 33.7 million. In 2017, the four services had gained 1.2 million subscribers. Since then, gains by the two vMVPD have not been able to offset losses in the satellite business. Since 2017, the four services have lost 3.6 million subscribers.
A quarter of US homes do not have cable, satellite, or telco TV service
Households without traditional pay TV grew 3.2 million in the first half of 2019, an increase of 10%. Of course, most of these homes continue to watch TV. They just obtain it from a different source:
- There are 8.6 million vMVPD homes
- 70% of all US homes (85.8 million) have at least one subscription to an SVOD service
- There are also 16 million homes using over-the-air broadcasts.[ii]
Traditional pay TV loses likely to accelerate in the second half of 2019
If cable, satellite, and telco TV providers continue to lose subscribers at the same rate as the first half of the year, the industry could lose almost 6 million subscribers in 2019. There is little reason to believe that pay TV providers will try and slow the decline.
Two of the biggest providers, AT&T and Comcast, have stated they are focused on retaining higher-value customers and will do nothing to keep lower value customers if they opt to leave. Since the strategy appears to be improving profit margins, neither operator has any reason to reverse course. Others may be tempted to copy them.
The entry of Disney and AT&T into the SVOD market also may have an impact. More importantly, Disney’s bundle of Disney+, ESPN+, and basic Hulu for $12.99 a month could nudge some pay TV customers to leave the fold. Combining the Disney bundle with Netflix and a basic Sling TV subscription provides a massive amount of content across all genres for $50 a month. The average DirecTV and Comcast pay TV customers spend $119 and $86 a month respectively.
In other words, losses are more likely to grow in the second half of 2019, not shrink.
[i] https://www.census.gov/housing/hvs/data/histtab13.xlsx (will initiate a download of a spreadsheet.)
[ii] In the Q2 2019 Total Audience Report, Nielsen says 13.3% of the 119.9M TV homes watch over-the-air TV
Tables and graphs on this page are derived from various resources including pay TV operator financial fillings, Leichtman Research, Nielsen et al. The analysis and calculations based on this data was performed by nScreenMedia