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Analysis for 'Cord-Cutting'

  • VideoNuze Podcast #539: Strong Third Quarter for Pay-TV

    I’m pleased to present the 539th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.  

    Despite gloomy predictions, the pay-TV industry in the U.S. turned in a relatively healthy third quarter in 2020, likely gaining subscribers. This was due to robust additions by virtual pay-TV providers (led by Hulu + Live TV and YouTube TV) and moderating losses by traditional providers (especially AT&T which had a huge loss in Q3 ’19).

    Colin and I discuss how a big reason for Q3’s gains was the return of all major sports. Except for the NFL, major sports aren’t available in Q4. That means churn is likely to be up in Q4, though it could be offset by the pandemic keeping people indoors more.

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  • Cord-Cutting Slows in Q3 as Virtual TV Providers Jump

    Cord-cutting slowed down in Q3 ’20, with top pay-TV providers in the U.S. losing around 120K subscribers, according to Leichtman Research Group. These pay-TV providers account for about 95% of total pay-TV subscribers in the U.S. In Q3 ’19, on a pro forma basis, this group of providers lost approximately 945K subscribers.

    While top traditional pay-TV providers all improved their performance in this year’s third quarter, a key driver of overall industry performance was virtual pay-TV providers, which recorded their best quarter ever. According to LRG, four of the virtuals (Hulu + Live TV, Sling TV, AT&T TV Now and fuboTV) collectively added 1.035 million subscribers in Q3 '20. Hulu + Live TV was by far the biggest contributor, with 700K additions, making it now the fifth largest pay-TV provider with 4.1 million subscribers.

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  • Forecast: Cord-Cutting to Quadruple Over Next 5 Years

    A forecast from The Diffusion Group last week calls for the rate of cord-cutting in the U.S. to nearly quadruple over the next 5 years compared to the rate for the prior 5 years. TDG expects by 2025 pay-TV subscribers will contract by 36% from 2020, compared with a 9.5% contraction experienced in the 2015-2019 period.

    Overall TDG sees legacy pay-TV providers ending 2020 with around 76 million subscribers. TDG also sees virtual pay-TV providers ending 2020 with around 11 million subscribers.

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  • VideoNuze Podcast #514: Digging Into Pay-TV’s Q1 Losses and ViacomCBS’s Gains

    I’m pleased to present the 514th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. As always, we hope our listeners are staying well.

    This week we share thoughts on the nearly 2.1 million video subscribers that large pay-TV operators lost in Q1. It was a record loss, and approximately half of it was attributable just to AT&T. Virtual pay-TV operators also had a tough first quarter. As a result linear TV networks must look to direct-to-consumer models, which is what ViacomCBS is doing with CBS All Access and Pluto. Subscriber gains have been impressive and we examine the company’s successful strategy.

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  • Pay-TV Loses Over 2 Million Video Subscribers in Q1 As Negative Forces Accelerate

    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.

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  • Sling TV’s “Happy Hour Across America” Could Drive Further Cord-Cutting

    Yesterday, Sling TV unveiled its “Happy Hour Across America” promotion which allows viewers free access to Sling Blue during the 5pm-midnight window. Sling Blue includes 50+ linear TV networks, cloud DVR and a 50K title VOD library. There were already significant macro trends driving cord-cutting of traditional pay-TV. The Happy Hour promotion follows Sling’s prior “Stay in & Sling” initiatives.

    Following are some of the reasons why Sling TV’s new Happy Hour promotion could further accelerate cord-cutting:

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  • Pay-TV Providers Lost Approximately 5 Million Subscribers in 2019

    It’s too soon to know whether 2019 will be remembered as the turning point year for the pay-TV industry - when all of the negative trends coalesced into a perfect storm that permanently diminished the industry’s place in American homes. But I’d say the odds are likely that 10-20 years from now, 2019 will likely be the top candidate for “turning point year.”

    For evidence, consider new data from Leichtman Research Group, finding that major pay-TV providers which account for 95% of the market, lost 4.9 million subscribers in 2019. If 100% of providers had been counted, the losses would have been 5 million or more.

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  • Here’s the Math For How YouTube’s Total Revenue Could Exceed $25 Billion in 2020

    Finally, finally, finally, Google provided some transparency about YouTube’s financial condition, in its Q4 ’19 and full year 2019 earnings report yesterday. YouTube’s financials have been treated as a state secret by Google since the beginning of time, with only high level usage information periodically shared.

    Even yesterday’s reveal was only for YT’s advertising revenue, which came in at $4.7 billion for Q4 ’19 and $15.1 billion for the year. YT’s subscription revenues - which consist of YT Music, YT Premium includes YT Music) and YT TV (its virtual pay-TV service) - were buried in “Google other revenue.” On the earnings call, CEO Sundar Pichai said all YT subscriptions had a $3 billion annual run rate at the end of 2019.  

    Using some conservative assumptions and relatively quick math, it’s clear that YT’s total revenue could exceed $25 billion in 2020. As I also detail below, YT has to be considered among the best acquisitions in corporate America’s history. For Google, only the acquisition of Android (for the measly price of $50 million) could be considered more successful.

    Here are my calculations:

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  • VideoNuze Podcast #499: AT&T is Bleeding Pay-TV Subscribers, Leading to 2020 Surge in Cord-Cutting

    I’m pleased to present the 499th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Earlier this week AT&T reported its Q4 ’19 earnings. There was plenty of lousy news, and as Colin and I discuss, at the top of the list was a loss of over 1.1 million pay-TV subscribers in the quarter, compared with 658K subs lost in Q4 ’18. For the full year, AT&T lost 4.1 million, more than 5x the 750K it lost in 2018. The combined 4.8 million subs that AT&T has lost in the past 2 years is nearly 20% of what it started with back on Dec. 31, 2017.

    There is arguably no bigger influence on the pay-TV industry’s overall cord-cutting rate than AT&T because of its sheer size and outlier loss level. All of that - and lots of other factors - lead us to believe that the rate of cord-cutting is actually going to accelerate in 2020. Colin has crunched the numbers and believes when all the Q4 results are reported, the traditional industry (not including vMVPDs’ gains) will probably lose around 6.5-7 million subs in 2019. He sees that escalating to around 8.5 million in 2020.

    We dig deeply into all of this on the podcast. We all have a front row seat to an industry in complete transformation. As it has in countless other industries, we are watching the Internet massively disrupt the pay-TV and TV industries.
     
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  • AT&T Lost Over 1.1 Million Video Subscribers in Q4 ’19; Nearly 20% of Base in Past 2 Years

    AT&T reported its Q4 ’19 earnings this morning and in the “Entertainment Group," it was U-G-L-Y. The top line numbers are mind-boggling: 945K “premium video” subscribers (DirecTV and U-verse) lost and 219K “OTT video” subscribers (DirecTV Now and AT&T TV) lost for a total of 1.164 million lost. In Q4 ’18, AT&T lost 391K premium subs and 267K OTT subs for a total of 658K subs lost. So the Q4 ’19 sub loss was 77% higher than the Q4 ’18 sub loss - although in the category of “cold comfort,” it was 14% lower sequentially vs. Q3 ’19 when AT&T lost 1.36 million combined video subscribers.

    But broaden the lens to consider full year 2019 vs. full year 2018 and things look even worse. In 2018 AT&T lost a total of 750K subscribers (a result that was helped enormously by the addition of 654K total DTV Now subscribers in first half of the year, more on that below). In 2019 AT&T lost 4.1 million subscribers or more than five times the prior year.

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  • VideoNuze Podcast #484: New Industry Data on Connected TVs and Cord-Cutting

    I’m pleased to present the 484th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast we discuss newly released industry data from FreeWheel’s Q2 ’19 Video Marketplace Report, Roku’s Cord-Cutting 2019 study and Manatt-Vorhaus Advisors Digital Strategy study.

    Each contains insights about the video industry and fast-changing viewer behaviors. In particular, we focus on the dominance of connected TVs in video ad views, new trends in cord-cutting and the rising usage of smartphones among younger audiences.

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  • Research: Streaming Services Linked to Cord-Cutting

    Streaming services have long been linked to cord-cutting, and new research from Manatt and Vorhaus Advisors provides another window into the relationship.  Among those likely to cut the cord in the next year, nearly half (44%) said that after doing so they would rely on SVOD services like Netflix or Hulu.

    And when asked their reasons for going without pay-TV service, “too expensive’ topped the list of reasons cited (as expected) with 47%, followed by “I don’t watch enough TV to make it worth it” (30%). But then the next 3 reasons all relate to the strength of streaming services: “I am satisfied with online streaming options on my TV,” (24%) “I have enough entertainment options on the Internet” (23%) and I can watch the TV shows and movies I like on the Internet” (21%).

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  • VideoNuze Podcast #479: Pay-TV’s Q2 Subscriber Losses; Viacom-CBS Upside

    I’m pleased to present the 479th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Q2 was a very tough quarter for pay-TV operators, with cord-cutting soaring to a record level. This week we dive into the numbers and discuss why things have changed so dramatically since Q2 ’18. Then we transition to the Viacom-CBS deal, which was formally announced this week. Colin sees substantial upside, leveraging Pluto TV, which Viacom acquired earlier this year.

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  • Cord-Cutting Tops 1.5 Million in Q2 ’19

    Cord-cutting surged to a record in Q2 ’19, with pay-TV providers that account for 93% of the industry losing just over 1.5 million subscribers, according to Leichtman Research Group. The loss is up from 420K in Q2 ’18. As usual, satellite providers were responsible for the majority of the losses, with DirecTV losing 778K subscribers in the quarter and Dish losing 79K. The combined drop was nearly double the 480K lost in Q2 ’18.

    The biggest seven cable TV operators lost a combined  455K subscribers in Q2 ’19 compared to a loss of 275K a year ago.

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  • Research: U.S. Cord Never Population Rises to 31 Million

    There are now approximately 31 million “cord never” adults in the U.S. - people who have never paid for a traditional pay-TV service - according to MRI-Simmons’s latest Cord Evolution research. This represents 12% of the U.S. population, an increase from 9% that MRI-Simmons found in 2017. Cord nevers have a median age of 33 and household income of $52,800 (up from $41,500 two years ago).

    With the massive explosion of streaming options, it is easier than ever for viewers to avoid becoming a pay-TV subscriber. It is even more alluring for younger viewers for whom streaming has played a bigger part in their lives and who are less wedded to traditional channel surfing and linear viewing.

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  • VideoNuze Podcast #448: The Top 10 Video Stories of 2018

    I’m pleased to present the 448th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Continuing our tradition for our final podcast of the year, this week Colin and I discuss the top 10 video stories of 2018 - at least in our humble opinions. Once again it has been a very active 12 months, with lots of innovation and change. Colin and I have had a great time analyzing and discussing the critical industry trends each week and we hope you’ve enjoyed listening to our thoughts in 2018.

    Let us know what you think of our choices, whether you agree or disagree!

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  • Research: Live News, Sports and New TV Episodes Are Top Reasons To Keep Pay-TV

    New research from Altman Vilandrie & Company finds that access to live news, sports and new TV episodes are the primary reasons pay-TV subscribers are continuing to keep their service.

    However, there are slight difference between those age 18-34 years old vs. those 35+. For the older group, the top reasons and the percentage cited were live news (70%), new TV episodes when aired (55%) and live sports (53%) whereas for the younger group, the top reasons were new TV episodes when aired and it is easier to find something to watch (both cited by 54%), live sports (51%) and live news (48%).

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  • VideoNuze Podcast #445: Exploring Pay-TV’s Record High Subscriber Losses

    I’m pleased to present the 445th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast Colin and I explore the pay-TV industry’s record high video subscriber losses sustained in Q3 ’18 (more here and here). The two big satellite services, DirecTV and Dish Network were major contributors. But perhaps more important was a dramatic slowdown in subscriber additions for the two biggest virtual pay-TV operators, Sling TV and DirecTV Now.

    As we discuss, with these virtual services in flux and not stanching the bleeding of traditional multichannel TV, the critical underlying trends of cord-cutting and cord-nevering burst onto full display in Q3. Meanwhile, the strategies and success of virtual services like YouTube TV, Hulu Live and others is murky at best. All of this shows how unstable the pay-TV industry as a whole currently is.

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  • Research: Roku Users Have Lower Pay-TV Subscription Levels

    The Diffusion Group has released new data showing that Roku users have the lowest levels of traditional pay-TV subscriptions and the highest level of cord-cutting. According to TDG, 64% of Roku box users and 66% of Roku stick users subscribe to pay-TV. 30% of Roku box users and 26% of Roku stick users are cord-cutters.

    For all adult broadband users, 73% continue to subscribe to pay-TV, with just 21% saying they’re cord-cutters. Other devices measured, including Fire TV, Apple TV and Chromecast all had slightly higher levels of pay-TV subscriptions and similar to lower levels of cord-cutting.

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  • VideoNuze Podcast #426: Magid’s Cord-Cutting Research; Sling TV Updates

    I’m pleased to present the 426th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    First up on this week’s podcast, we discuss Magid’s latest research showing another uptick in cord-cutting intent among pay-TV subscribers, especially for millennials. Even sports fans are now considering cutting the cord. Perhaps most surprising, cost is no longer the main motivator; it’s not watching enough TV to make it worth it.

    That’s indicative of more pay-TV subscribers shifting their viewership to SVOD, and suggesting an opportunity for low-cost virtual pay-TV operators to gain momentum. One such player, Sling TV just made some interesting updates to its service this week which we discuss.

    I think the Magid research is part of the reason why we need to revise how we talk about cord-cutting. Increasingly, I think an equally, if not more appealing, option for prospective cord-cutters will be downgrading to a skinny bundle, rather than dropping entirely. More on this on VideoNuze soon.


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