A recent report from Leichtman Research Group claimed that the major pay TV providers in the US lost 385,000 subscribers in 2015 – but by our watch we make the real figure to be more than 1.5 million.
We’re not sure why other research firms feel the need to sugar coat the pay TV figures by either omitting or choosing to ignore significant losses, but Faultline will continue to tell the truth, no matter how bleak the future looks.
DirecTV made a slight recovery in Q4 2015 by adding 214,000 subscribers, ending the year with just under 19.8 million, but in Q1 it had 20.41 million subs; that’s a loss of around 610,000 – so it’s unclear where Leitchman got its figure of 167,000 subscriber additions for DirecTV in 2015. Coupled with U-verse’s subscriber loss of 350,000, this gives AT&T an overall pay TV customer loss of 960,000 for the year.
The only explanation in sight is that AT&T has stopped pushing U-Verse to anyone and everyone, but instead is now only taking on profitable business, so expect the decline to go on. Any financial analyst who only takes in the cellular numbers is missing the point.
However, the start of this month saw AT&T announce it will be taking DirecTV OTT with three new flavors in DirecTV Now, DirecTV Mobile, and DirecTV Preview. This move will have much the same effect on DirecTV as Sling TV has had on Dish – it will give permission to the wider audience to substitute the more expensive service for the cheaper OTT version.
DirecTV will, in a few quarter’s time, begin heading down the same track and as soon as this service is available later this year, AT&T will almost definitely only give out total subscriber, arpu and churn numbers and not distinguish between U-Verse IPTV subscribers, DBS (DTH) subs and OTT.
Most external estimates of Dish’s Sling TV numbers have it around a run rate of 150,000 a quarter, so some 600,000 customers so far, making its reported number of 13.9 million customers, look more like 13.3 million which remain still on the satellite network. Dish reported a fall of some 81,000 customers for 2015, compared to 79,000 in 2014, but in that year there was no Sling TV, the real losses are closer to 681,000.
What we have seen from Dish and other operators is the model of accidentally training subscribers in OTT, with Sling TV – which is the exact opposite of the behavior it wants from its customers. We showed last month that Dish was shrinking and at this rate would be a $5 billion pure OTT business in as little as 15 years, earning less profit and a fraction of its size today. With DirecTV going OTT, this will have a similar effect on the company as Sling TV has had on Dish – it will give permission to the wider audience to substitute the more expensive service for the OTT version.
Goldman Sachs is one of the few research firms who are on the same wavelength; estimating that Dish lost 543,000 satellite TV customers last year, and forecasts this to reach 724,000 in 2016.
Comcast recovered from ending 2015 with 125,000 less video customers by adding 89,000 in the final quarter, to finish the year on 22,347,000; a loss of 36,000, but still the highest number of overall pay TV subs in the country. We are still suspicious about this figure, as Comcast changed the way it counts subs last year, and jumped by 1 million customers. Will it now begin counting Stream TV homes as pay TV customers? We expect so.
Cablevision and Cable One both lost 87,000 video customers a piece, and Mediacom lost 35,000. Cox, Brighthouse Networks, and Suddenlink combined lost 153,400.
Some pay TV figures doing the rounds are clearly focused on the gains some operators made in Q4, and have for unknown reasons reported this as overall annual growth.
Digital TV Research published its 5th edition of the Digital TV North America forecasts this week, which estimates pay TV subscribers to fall to 106 million in 2021, from its peak of 112 million in 2012. The report says that last year saw an overall loss of pay TV subs in the US and Canada of over 2 million. Also, Digital TV Research says pay TV revenues hit a high in 2015 of $111.64 billion – it forecasts this to fall by 21% to $98 billion in 2021. That’s a bit more like the truth.