The second quarter is usually rough on pay TV providers, and 2017’s Q2 was the roughest one on record, according to a new analysis from MoffetNathanson’s Craig Moffett.
Traditional pay TV distributors lost about 941,000 subscribers in Q2, the worst quarterly loss ever, Moffett noted in the firm’s latest Cord-Cutting Monitor report.
The rate of pay TV subscriber erosion also increased from 2.5% last quarter, to 2.7% in Q2, making it the “fastest rate of decline on record,” Moffett wrote.
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Notably, the ratio of subscribers lost by pay TV providers that were recaptured by virtual MVPDs remained essentially unchanged at 50%.
Recognizing that data on vMVPDs “is very sketchy” since most of them don’t report numbers, Moffett estimated that Sling TV added 89,000 subs in Q2, while DirecTV added 80,000 (excluding free trials), while PlayStation Vue, Hulu Live and YouTube TV brought in about 300,000 between them. fuboTV, a sports-oriented service, is also in the OTT TV mix.
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When combining Q2 sub losses by traditional pay TV providers (941,000) along gains from the group of vMVPDs (469,000), Moffett estimates that the total net loss for Q2 was about 472,000 subs.
Among traditional pay TV providers, cable operators lost 221,000 video subs in Q2 (a 1.1% year-on-year loss), while satellite TV providers lost 441,000 (2.3%), and the telcos shed 279,000 (11.6%).
Including distribution by vMVPDs, pay TV programmers lost 472,000 subs in Q2 2017, improved from a year-ago loss of 630,000, the report found.
Looking ahead, Moffett expects losses to accelerate in Q3 among traditional pay TV providers, but acknowledged that this continues to be uncharted territory for the industry, making it harder to know what the long-term impact will be and raising many questions.
For example, will the rate of decline for distributors stabilize at around 3% per year losses, as Moffett’s predicting, or will they rise to as much as 6% per year? And will the recapture rate for vMVPDs continue to hover around 50%, or rise or fall?
“There is, unfortunately, no roadmap,” Moffett wrote.
