Video losses set to snowball if large cablecos turn their back on the segment
Details
Michelle Clancy
| 19 March 2019

A wholesale retreat from courting new pay-TV subscribers in favour of marketing broadband on the part of larger US cable operators could profoundly change the competitive landscape in that country, according to a leading US analyst.

Craig Moffett, partner at leading firm MoffettNathanson said in a recent research note that subscriber losses at market leaders Comcast and Charter Communications are only tracking at around 1.7% and 1.4%, respectively – while Cable One, which as largely stopped marketing video, is seeing a significant 10.3% video sub loss rate. Cable One has been dialling back on programming, raising video pricing and even encouraging OTT subscriptions.

"If larger MSOs follow their smaller peers in concluding that video is no longer worth defending, then subscriber declines would almost certainly accelerate, perhaps radically so," Moffett wrote. "And that, in turn, would force programmers to be even more aggressive in licensing their content to OTT services, sealing the deal. The industry as we know it today could, or would, simply unravel."

Overall under current conditions, Moffett expects overall pay-TV sub losses to stabilise eventually in the 3% to 4% range, after a slightly sharper 4.5% rate in 2019. However, he warned that if large cable operators stop offering deal-sweeteners for video subscriptions, losses would accelerate to 7.2% in 2019 and 9.7% in 2023.

"It is getting to be a bit less clear which of the two paths we are on," Moffett added in the research. "There is a growing sense of unease among industry participants that Scenario Two, once unthinkable, is becoming more, well... thinkable. It is time to start thinking more seriously about Scenario Two."