Over the top services (OTT) are affecting the pay TV business. Maybe only a little, but measurably.
In the second quarter AT&T and Verizon added video customers (233,000 and 140,000 respectively), but their gains do not even come close to offsetting the subscriber losses experienced by most of the top cable operators and both satellite providers.
Analyst Craig Moffett estimates the entire MVPD market lost a total of 380,000 video customers. Leichtman Research Group (LRG) estimates 345,000 lost video customers among just the top 13 MVPDs. Either way, it’s a loss of about 0.1 percent of all video subscribers.
“Cord cutting used to be a myth. It isn’t any more,” Moffett wrote. “No, the numbers aren’t huge. But they’re statistically significant.”
Penetration is also down, and while cordcutting numbers do come in to play there, other factors are more prominent. Penetration has slightly declined due to a larger increase in the number of rental housing units.
LRG calculates that 86 percent of households nationwide subscribe to some form of multichannel video service, down from 88 percent in 2010.
Bruce Leichtman, president and principal analyst for LRG said, “While some consumers continue to go in and out of the category, economic factors appear to be as strong a force in shaping this market as the emergence of over-the-top alternatives alone.”
LRG provided some statistics about those who have cut the cord: Among TV households that do not currently subscribe to a multichannel video service, 40 percent subscribe to Netflix, 11 percent to Amazon Prime, and 7 percent to Hulu Plus.
In total, 42 percent of non-subscribers get at least one of these three OTT services, and 58 percent of non-subscribers do not get any.
Overall, this results in 8 percent of all TV households watching over-the-air (OTA) broadcast TV only (down from 10 percent in 2010), and 6 percent watching a combination of OTA and OTT programming. This group includes about 1 percent of all household that do not subscribe to a multi-channel video service primarily because they can watch all that they want via the Internet or Netflix, LRG reports.
While total video subscribers and video sub penetration both are going down, the trends thus far for broadband subscribership continue to go up.
LRG found that the total number of broadband subscribers among the 17 largest cable and telephone providers in the U.S. increased by about 295,000. These 17 now account for over 82.7 million subscribers; cable companies claim over 47.8 million of the total.
While Verizon and AT&T together added 802,000 fiber-based broadband subscribers, between them they lost 818,000 DSL subscribers, giving them a net loss of Internet subscribers.