Legacy Pay TV Providers Take Hit, OTT Rises

Traditional pay TV distributors witnessed some of the steepest declines in fourth-quarter 2016 -- but adding in new “virtual” pay TV providers trimmed those drops. For many, this means cord-cutting has arrived.

MoffettNathanson Research says there was a 1.7% decline in traditional cable, satellite, and telco TV distributors -- losing 319,000 to total 96.499 million U.S. subscribers.

But at the same time, virtual/digital pay TV providers Sling TV and DirecTV Now added 500,000 subscribers. Together those services total 1.411 million -- 1.184 million for Sling TV and 227,000 for DirecTV Now.

“With the results now in from all the largest operators, it is clear cord-cutting of legacy distribution services -- that is, without including OTT-delivered virtual MVPD bundles, like Sling TV and DirecTV now (and soon, YouTube TV) -- has at least meaningfully accelerated,” writes Craig Moffett, senior research analyst of MoffettNathanson.

The total for traditional and digital pay TV was 97.91 million in the fourth quarter of 2016 -- slightly down, 0.8%, from 98.76 million in the fourth quarter of 2015.

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Cable operators had net loss of 1,000 subscribers in the fourth quarter, whlle satellite operators were down 10,000 and telco companies sank 308,000 -- largely due to AT&T continuing to shift consumers from its U-Verse service to DirecTV.

Total new additions in the fourth quarter -- traditional and digital -- were at 181,000.

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