MARCH 16, 2018 2:31PM PT *Why Cord-Cutting Soared in 2017: High Cost of Pay TV Was No. 1 Factor*
*By Todd Spangler* *NY Digital Editor, Variety* *http://variety.com/2018/biz/news/cord-cutting-2017-high-cost-cancellation-pay-tv-1202728922/ <http://variety.com/2018/biz/news/cord-cutting-2017-high-cost-cancellation-pay-tv-1202728922/>* The cord-cutting numbers for 2017 are in, and they paint an increasingly dreary picture for pay-TV providers — which experienced their worst losses to date. Analysts estimate U.S. cable, satellite and telco operators shed between 3.1 million and 3.5 million traditional TV subscribers last year. That’s a significant acceleration over the 1.9 million the sector lost in 2016, per Kagan, with the sub base shrinking 3.7% in 2017. As of the end of 2017, combined cable, direct broadcast satellite and telecommunication (telco) multichannel subscriptions fell to 94 million, according to Kagan. That’s down 7.4 million from their peak in 2012, a drop of more than 7%. And there’s no evidence to suggest the slide will slow down anytime soon, as legacy pay TV’s “fat” bundles look more and more like a luxury item. Some of the losses are attributable to more American consumers downgrading to cheaper “virtual” internet-TV skinny bundles. But those don’t account for the full exodus: While traditional pay-TV declined by a net 3.3 million subs in 2017, online pay-TV services added 2.6 million, according to Wall Street firm MoffettNathanson. The latter category included Dish’s Sling TV, AT&T’s DirecTV Now, YouTube TV, Hulu’s live TV package, and Sony’s PlayStation Vue. The chief culprit for the continued decline of subscription television? No surprise: The high cost of cable and satellite TV services was the No. 1 reason cord-cutters said they cancelled pay-TV service, according to TiVo’s Online Video and Pay-TV Trends Report for Q4 2017. Among cord-cutters, 87% said they cancelled service because of its high price, up about seven points from a year earlier, per the TiVo report. In addition, of pay-TV subscribers who said they were unsatisfied, 83% chose “Too expensive/Increasing fees for cable/satellite services” — the top response. TiVo’s report was based on a survey of 3,330 adults in the U.S. and Canada. The average price U.S. consumers said they would pay for a package of self-selected channels is $35.87 per month. That’s in line with the prices of DirecTV Now, Sling TV and YouTube TV. By contrast, only 15% of pay-TV customers say they pay less than $50 per month — and 56% said they shell out $76 or more per month for cable or satellite TV. Clearly, the newer internet-TV players are attracting customers with lower prices. But it’s not a sustainable model, according to MoffettNathanson’s Craig Moffett. For the two big satellite operators in particular, trading traditional subs for over-the-top TV customers has been a drag on earnings. For the fourth quarter of 2017, Dish Network revenue dropped 5% — earnings before interest, tax, depreciation and amortization tumbled 21.5%. At AT&T’s Entertainment Group (which includes DirecTV) revenue slid 3.5% and EBITDA dropped 11.2% for the period. “But at least they are adding subscribers. I mean, that’s something, isn’t it?” Moffett noted archly in a research note earlier this month. True, the virtual pay-TV services may simply hike prices the same way old-fashioned satellite and cable have for years. For example, Google this week raised the price of YouTube TV by 14% over the intro price, to $40 monthly for new subscribers, after adding Turner networks (just in time for March Madness). For now, as long as internet-TV services price themselves at or below cost — and there’s no reason to believe that will change dramatically — per Moffett: “Being a vMPVD [virtual multichannel programming video distributor] will remain a truly lousy business.”
_______________________________________________ Medianews mailing list Medianews@etskywarn.net http://etskywarn.net/mailman/listinfo/medianews_etskywarn.net
