Cord-cutting bites as multichannel video industry posts first net subs loss

Joseph O'Halloran | 21-05-2013

Even though the major multichannel video providers added 195,000 subscribers in Q1 2013, the quarter marked the first net customer loss over a four-quarter period, according to Leichtman Research Group (LRG).

In its survey of the 13 largest multichannel video providers in the US, representing about 94% of the market, the analyst also found that the quarterly net gains in Q1 2013 were down significantly compared with the net gain of about 445,000 in Q1 2012, and a net gain of about 470,000 in Q1 2011.
Moreover, these gains were not enough to offset subscriber losses from Q2 and Q3 2012. This left the major providers with a net loss of about 80,000 subscribers over the past year, compared with a net gain of about 380,000 during the previous year.
Most worryingly, the analyst suggested that the over-the-top (OTT) players were now biting into the pay-TV market. “[The] first-time ever annual industry-wide losses reflect a combination of a saturated market, an increased focus from providers on acquiring higher-value subscribers, and some consumers opting for a lower cost mixture of over-the-air TV, Netflix and other over-the-top viewing options," suggestedBruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. "The traditionally weak second quarter is sure to show additional net subscriber losses, but it is unlikely that these current modest industry losses are a harbinger of a more dramatic near-term market decline."
The analyst also found that the leading providers accounted for about 94.9 million subscribers, with the top nine cable companies having over 51 million video subscribers, satellite TV companies having 34.2 million subscribers, and top telephone companies having nearly 9.7 million subscribers. LRG revealed that the top nine cable companies lost about 264,000 video subscribers in Q1 2013, and about a 1.56 million over the past year, compared with a loss of about 1.535 million over the prior year. Satellite TV providers added 57,000 subscribers in Q1 2013, the fewest in any Q1 over the past decade
Time Warner suffered the most net losses, losing 553,000 customers in the past 12 months followed by Comcast shipping 359,000 and Charter 217,000. By contrast IPTV providers Verizon FiOS and AT&T added 542,000 and 777,000 subs over the year respectively.