Virtual Pay TV Services See Slowing Growth

New virtual pay TV providers continue to see rising prices -- generally higher than a year and a half ago. And that is slowing down the growth of the business.

Monthly packages now cost anywhere from $45 to $50 per month -- an increase of about 50% from the $30- to $35-per-month levels, according to MoffettNathanson Research. All this has meant a slowdown in growth of vMVPDs (virtual multichannel video program distributors).

Craig Moffett, senior research analyst, MoffettNathanson Research, sees “the conversion rate of traditional losses [from cable, satellite, telco services] to vMVPDs falling to an estimated 40% over the last 12 months.”

Moffett estimates total new vMVPD net subscriber additions will rise 584,000 in the third quarter to total 8.9 million -- up from 8.4 million in the second quarter. Traditional pay TV services -- cable, satellite, and telco -- in the third quarter were at 1.8 million, now totaling 84.5 million subscribers, down 6.2% from the third quarter a year ago.



The better-performing vMVPD services are those that have maintained low prices.

“The two vMVPD services that have maintained relatively low pricing -- Sling TV and Hulu Live + TV -- were perhaps the biggest winners in the quarter.” Sling TV added 214,000 subscribers in third quarter, now totaling just under 2.7 million subscribers, while Hulu Live has seen bigger growth of 375,000 subscribers, to reach just over 2.7 million.

According to eMarketer, the number of US cord-cutter households will climb more than 19% this year to 21.9 million, reducing the number of traditional pay TV households to 86.5 million.

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