Thursday, May 14, 2020, 12:36 PM ET|Posted by Will Richmond
Large pay-TV providers lost a total of nearly 2.1 million video subscribers in Q1, according to data compiled by Leichtman Research Group. The 2.1 million is more than double the approximately 1 million video subscriber loss sustained in Q1 ’19 and a record for the industry.
No doubt Q1 reflected ongoing challenges the industry has faced for years: high pricing relative to SVOD services, subpar linear viewing experiences interrupted by too many ads, a proliferation of connected TV devices enabling myriad competitive OTT services to be viewed on the big screen, etc. But the tail end of Q1 also saw the first impacts of Covid-19: the loss of live sports which has been a pay-TV’s firewall for years and the economic crisis that’s leading to consumer belt-tightening.
Meanwhile broadband ISPs reported record subscriber growth in Q1. Netflix had a blowout quarter, which it conceded represented some pulling forward of demand. Disney+ grew to over 50 million subscribers. And just ahead are the full launches of Peacock and HBO Max. In this context, fewer people are signing up for pay-TV service and more people who already have it are experiencing lower value and defecting for other options.
While all traditional pay-TV providers lost subscribers in Q1, as usual it was satellite and telcos that suffered the worst, with AT&T in particular bearing almost half of the industry’s overall loss. AT&T’s DirecTV lost 897K subscribers in Q1 ’20 vs. 543K lost in Q1 ’19. AT&T also lost 138K AT&T TV Now subscribers in Q1 on top of the 219K lost in Q4 ’19 (AT&T TV Now is the successor brand to DirecTV Now, which at one time was the leader among virtual operators). AT&T TV, the company’s new flagship linear TV service, meant to replace DirecTV, doesn’t seem like a strong innovator, as it requires a 2 year contract, separate set-top box, and other fees.
In Q1 even the virtual operators didn’t fare well, with Sling TV losing 281K subscribers, compared to a gain of 7K a year ago. MoffettNathanson has estimated that Hulu gained around 100K (vs. 300K a year ago), and YouTube TV gained 300K (vs. 200K a year ago). It wasn’t that long ago that virtual operators’ additions were compensating for traditional operators’ losses, but those days are long over. As they’ve added more TV networks to their lineups, virtual operators have continued raising prices, which has in turn reduced their primary appeal of cost savings. And of course, the lack of live sports has hurt every linear TV provider.
Topics: Leichtman Research Group