2015 is proving to be a very bad year for cable and satellite television providers in the U.S. as new research reveals they just suffered the largest quarterly decline in subscribers ever.
Satellite broadcaster DirecTV bore the brunt of the losses. The service, which was recently acquired by AT&T for $50 billion, revealed they lost a shocking 133,000 U.S. subscribers in the second quarter of 2015, which runs from April 1 to June 30. Dish also lost a total of 81,000 subscribers, nearly double their 44,000 subscriber loss from last year. And from the looks of it the rest of the industry isn’t doing any better.
The industry-wide subscriber loss for Q2 2015 now stands at whopping 566,000, according to Variety. That represents an annualized decline of 0.7%, which is a huge fall from the 0.1% annual decline that stood just last year.
These declines have usually been dismissed by the television conglomerates themselves; however, shareholders really took notice this time.
In anticipation of a drop in subscriber fees, Disney stock fell 14 percent in the wake of the uptick in subscriber losses. MTV parent company Viacom was also down 22 percent and Discovery Communications down 11 percent before prices stabilized two days later.
“Questions around the death of pay TV are now front and center even if the size and pace of declines are likely being overstated by press and (Wall) Street commentary,” MoffettNathanson Research analyst Michael Nathanson wrote in a report.
While Q2 is traditionally a slow quarter for television subscriptions (no one’s gonna sign up for a new TV service before their summer vacation), this incredible decline is largely attributed to cord cutters that are moving away from broadcast television entirely and favoring streaming services like Netflix, Hulu, Amazon Prime Video, and even YouTube.
While some may think the pace of decline is being overstated, data suggests that this pace will only continue to increase in the coming years as industry research is finding fewer and fewer subscribers that see any kind of value in linear television services; which many existing subscribers already view as both inconvenient and expensive.
Research from SNL Kagan, who were the first research firm to accurately measure the first ever full-year decline in television subscribers in 2013, also suggests that fewer existing subscribers are willing to pay the extra $40+ per month for the wider bundled selection of cable channels.
“I don’t think the sky is falling quite yet,” Cablevision Systems CEO James Dolan said in the company’s latest earnings call about the threat of cord cutters. “I think that there is not enough programming weight yet in the Internet and in the over-the-top services that are out there to really entice a mainstream video customer.”
That may change very soon as Netflix recently a pledged $5Bn to invest in new content while Amazon has promised to “double down” on its multi-billion dollar programming budget to keep up with Netflix.
The tide is shifting and consumer behavior is changing faster than ever before.
As a society, we’re less than a decade away from a generation of consumers that only know streaming and on-demand viewing becoming the most prized demographic for advertisers. And at this stage only one thing is certain. They won’t be watching pay TV.