With linear pay TV subscriber levels pulling back from the 3.5% attrition rates seen in 2017, equity research firm Cowen & Company believes the traditional cable, satellite and telco TV market might be stabilizing … at least until Generation Z enters the workforce.
“Our explanation for improvement was that the competitive industry simply needed to take a breather,” Cowen said in a recent report lead-authored by analyst Gregory Williams.
“Losses escalated in 2017 after the emergence/traction of deep-pocketed, full service vMVPD’s (YouTube TV, Hulu Live TV, DirecTV Now, and Sling TV) that we’d argue do not have the economic mandate for profit as a formidable competitor to traditional video,” Williams added. “With these vMVPD providers already in place, and no vMVPDs of similar stature entering the market for the foreseeable future (outside of perhaps Apple TV), we argue that pay TV loss trends have leveled out (until Gen -Z enters the workforce in 2021).
The Cowen chart directly below indicates virtualized, live-streaming MVPD services have been successful at capturing some of the defectors from the linear ecosystem—and that the exchange seems to be slowing down a bit.
Notably, Cowen believes vMVPDs tend to skew a little older, having “appeal to the older generation of cord cutters who still consume video in the traditional linear fashion.”
Cowen seems bearish about the prospect of next-generation viewers adopting what are essentially live-streamed version of traditional bundles. And a chart provided to MCN by another research company, The Diffusion Group, further outlines the challenge: The current generation of 18-24-year-olds doesn’t just show a taste for over-the-top consumption of video, it shows an outright preference.
