Cord-cutting accelerates in Q3 but effect not yet seismic
| 08 November 2014
Studying the ramifications of a week in which broadcast market leaders have positioned themselves for the future with over the top plays, analyst MoffettNathanson is warning against prophets of doom.
Analysing the recently released third quarter results of a number of pay-TV market leaders — not least Time Warner Cable, Cablevision, Comcast, Charter, DirecTV and Dish Network — MoffettNathanson says that the just-reported quarter belies a potential ‘volatility’ to come. Volatility in the number of over the top services from the likes of Dish, HBO, Sony and CBS (which unveiled a new premium OTT service that will complement its recently announced general service OTT play) which the analyst says have the potential to either ‘”change the game… or maybe just show how hard it will be to disrupt the status quo.”
CBS All AccessLooking at what it says will be the last quarter before such services come on-stream, MoffettNathanson described the phenomenon of cord-cutting as “quiescent” and that a trend of a “drip, drip, drip” loss to cord-cutting remained unchanged.
The analyst calculated that the there was just a 0.1% year on year dip in subscribers for a pay-TV subscribers industry as a whole whose revenues grew at 3.8% year on year.
Even though the threat of cord-cutting may still be somewhat exaggerated, what the analyst does stress though, just like other recent reports have observed, was that the satellite industry "appears to have hit a wall”. Evidence of this was a calculation that aggregate subscriber growth for DirecTV and Dish Network was the slowest ever at just 0.1%. It noted that only two years ago the satellite was growing at 1.5%. More impressive growth was also observed in the telco market of 11.2%, which was 18.2% two years ago, and despite general gloom the cable industry had slowed its losses to 2.4%, the industry’s best showing in five years.
The bigger picture MoffettNathanson concluded was that for pay-TV providers there was a shift away from growth and towards profitability and that it would be unrealistic to think that their success or failure of the forthcoming OTT launches would answer the many questions that loom about cord cutting. It stated: “We expect the pace of experimentation to accelerate. That will inevitably also accelerate what we have consistently described as a drip, drip, drip of cutting. But a faster drip, drip, drip is still a drip, drip, drip. The more dire fears of a seismic disruption still seem highly unlikely.”