Legacy Media Cos. May Not View Pay TV Customers As A Priority

Wonder how pay TV providers will survive in the future -- especially when video subscribers continue to decline? The answer is that video relationships may not be a primary part of their future.

Speaking at a media industry event in Florida, Dave Watson, senior executive vice president. Comcast and president-CEO, Comcast Cable -- the top cable TV operator with nearly 22 million subscribers -- said: "Video is intensely competitive, and we're simply not going to chase an unprofitable video relationship."

Watson says the growth of new OTT products from traditional pay TV providers and new companies is the reason for fiercely low competitive pricing.

S&P Global Market Intelligence’s Kagan unit finds that traditional pay TV subscribers have dipped below the 75% mark of all U.S. TV homes -- with competition coming from new OTT platforms, and a full 2018 year drop to nearly 4 million homes. Traditional pay TV is below 90 million U.S. pay TV homes.



Even adding in new services, traditional and virtual multichannel subscriptions combined fell nearly 1.3 million for the year.

Media analysts continue to worry about virtual pay TV services' profitability as many “skinny bundles” continue to be low-priced.

At the same time, many others are starting to tick up in their pricing, including DirecTV Now, now rising by around $10 a month to $50 to $70 a month for its four different packages.

All of this means AT&T, the parent of DirecTV, also believes chasing after unprofitable video consumers business isn’t a good idea.

Here’s the rub: The delta between traditional and virtual is edging closer. Traditional pay TV packages are still higher -- anywhere from $70 to $120, depending on the cable, satellite, or telco service for around 200 or so channels

Virtual MVPDs (multichannel video program distributors) are priced anywhere from Watch TV and Philo ($15 to $16 a month, respectively) to DirecTV Now, Playstation Vue and fuboTV ($50, $45, and $45 respectively).

If more viewers decide to become just over-the-air TV homes and/or broadband-only TV homes (now around 28 million in total as per Nielsen), powerful TV-media companies would need to find other ways to monetize their content.

While dealing with traditional and new pay TV services, many TV network groups are also proactive, maintaining their own OTT platforms.

A new mantra in the boardroom: going over the top.

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