TV Everywhere, the great hope of media companies to hold their ground against the rise of streaming services like Netflix, has not gone much of anywhere. A report out Friday from Adobe Digital shows that just 13.6% of households that subscribed to pay TV in the third quarter used TV Everywhere sites or apps, which let users view television channels on mobile and set-top streaming devices so long as they can enter login information that proves they are pay TV subscribers. That represents growth of merely 8% over the same quarter last year.
The march of the cord-cutters continues: 357,000 net U.S. pay TV subscribers were lost in the third quarter, and Dish TV alone lost 178,000 subs. Some small good news for pay TV: the number of lost subs abated somewhat from second quarter.
How did pay TV distributors including cable MSOs, IPTV operators and satellite providers, as well as relevant programmers, online video providers and technology companies, perform in 2015’s third quarter? Here’s an earnings summary for the biggest cable industry players.
Richard Plepler raps “myopic” distributors, including Comcast, for failing to use HBO Now to drive broadband value.
Millennials might be more inclined to subscribe to pay television services if their current (or potential) providers were to make a more concerted effort to demonstrate how the services can be used anywhere, on any device, according to research from strategy consulting firm Altman Vilandrie & Co.
Exclusives
How bad have things been for the pay TV industry lately? An estimated 300,000 Americans dropped TV service last quarter, and analysts are calling it good news. That’s about half as many as in the second quarter, which at more than 600,000 set an industry record.
People familiar with the matter say Amazon is exploring the creation of an online pay TV service to complement its existing video offerings and has reached out to major media companies including CBS and NBC about carrying their channels.
Streaming Services Should Be Part Of Pay TV
Creating an elegant interface that combines streaming services and pay TV services, so that Netflix and NBC both live on the same grid, would go a long way towards improving TV’s user experience. It would also benefit all parties, from networks and MVPDs to streaming services. But most of all, it would benefit the consumer.
Nearly a quarter of consumers who subscribe to pay TV made changes to their subscriptions over the past year. But that news isn’t as bad as one might expect. According to Parks Associates, of those who made changes to their service, 11% cut or downgraded their packages — but 9% upgraded their subscriptions to include more channels, premium channels or some sort of new technology, like a DVR.
An SNL Kagan report released Thursday shows pay TV services lost a record 625,000 subscribers during the second quarter — the biggest quarterly drop ever. The report underscored fears that cord-cutting is gaining momentum and starting to fray the TV industry’s business model.
Media companies and distributors indicated that more people are cutting the cord and ditching pricey channel packages. Meanwhile, media company executives did damage control, putting a positive spin on the prospect of selling individual channels online.
A testament to the rise in cord cutting, pay TV dropped a net number of subscribers in the first quarter of 2015 for the first time ever, contracting at a 0.5% annual rate, with a net loss of 31,000 customers in the first quarter. Traditional subscription TV providers face an array of Internet competitors, ranging from Netflix and Hulu to YouTube and other digital video sites, that are discouraging consumers from signing up for cable or satellite TV or prompting them to cancel service.
How OTT Services Will Impact Pay TV
Will the availability of over-the-top services, which deliver pay TV content directly to subscribers rather than forcing them to sign up for cable or satellite, result in fewer cable and satellite subscriptions? That’s been the big question ever since HBO became the biggest network to launch an OTT service earlier this month. Brett Sappington, director of research at Parks Associates, talks about the impact of OTT services, how they will impact pay TV and what the future of OTT services will be.
The pay TV industry contracted in the third quarter at a faster pace than a year earlier, signaling that “cord cutting” is accelerating as more consumers drop cable and satellite-TV connections. The pay-TV industry lost about 179,000 TV customers, a steeper loss from the decline of 83,000 in the year-earlier quarter, according to public company reports and estimates from Wall Street research firm MoffettNathanson LLC.
As Internet-video options proliferate, consumers will have a growing list of reasons to stop paying $90 or more per month for multichannel television. And the jockeying is now under way among programmers and distributors to prep the life rafts if viewers decide to jump en masse.
Legislation passed today by the House Judiciary Committee lacks pay TV-backed retransmission consent reforms. The committee’s vote means that the legislation at issue — which would reauthorize the Satellite Television Extension and Localism Act, or STELA — has now gotten the nod of three of the key congressional committees with a say on the legislation.
Congress Shouldn’t Carry Water For Pay TV
Fred Campbell, executive director of the Center for Boundless Innovation in Technology: “Pay-TV providers want to have it both ways. They want the ability to blackout channels they don’t think they need while asking Congress to prevent broadcasters from withholding their programming when video providers refuse to pay. Enhancing the power of pay-TV providers over programming in this way might improve their bottom line, but it wouldn’t benefit consumers. Congress should just say no.”
The Wall Street Journal is reporting that Amazon has approached big entertainment companies about licensing their television channels for a possible new online pay TV service. WSJ subscribers can read the full story here.
Executives linked with Fox, CBS and Univision have suggested the networks could move to pay TV distribution should Aereo be allowed to operate without paying retransmission consent fees. Pressed on the matter this week, Comcast CFO Michael Angelakis held back on whether NBC would consider a similar route.
Pay TV Not Keeping Pace With Economy
While the housing market added half a million new units in the fourth quarter, pay TV providers — including cable, satellite and telecom companies — added just 51,000 customers in the same period, according to research firm SNL Kagan. What’s more, pay TV actually lost a total of 5,000 users in the other three quarters, meaning it added a measly 46,000 customers last year, for a combined total of 100.4 million subscribers.
Think of all the challenges that loomed over the pay TV business as far back as late 2011. Cord-cutting? That continues to be more of a rounding error than a phenomenon. Apple TV? Still waiting on Steve Jobs’ brainchild to come to market. Other so-called over-the-top alternatives rumored to be brewing everywhere from Intel to Facebook? Nary a peep.
