• by Wayne Friedman , May 8, 2020

Virtual pay TV providers -- once considered the savior of traditional pay services, such as cable, satellite, and telco -- for the first time ever have lost subscribers on a quarter-to-quarter basis, according to MoffettNathanson Research.

“We estimate that the vMVPD category actually lost 341,000 subscribers [in the first quarter this year versus the fourth quarter 2019],” writes Craig Moffett, senior research analyst of MoffettNathanson Research. “The vMVPD [virtual multichannel video program distributors] category simply collapsed.”

Moffett says the COVID-19 pandemic contributed to this decline. Sports programming may have been the biggest draw for virtual pay TV services when consumers were making choices between vMVPDs and on-demand subscription services -- Netflix, Hulu, and Amazon -- but then sports TV stopped.

Traditional pay TV lost 1.8 million subscribers in the first quarter of 2020 -- now totaling 80.8 million -- with virtual providers now at 9.6 million subscribers. “On a net basis, none of the two million or so traditional distributor losses landed with vMVPDs.”

While consumers initially were drawn to virtual pay TV providers, the lower price wasn’t enough.

“A whole generation of customers likely viewed vMVPDs quizzically, as a solution to a problem they didn’t have. The real issue was the grid,” says Moffett. The “grid”  is the traditional programming schedule -- the on-air electronic program guides of live, linear TV networks -- that still occupies much of pay TV.

“Why would anyone want to view entertainment content on a schedule, much less someone else’s schedule?”

Other analysts believe the beneficiaries in this marketplace are consumers going to SVOD services (Netflix, Hulu, and Amazon) and free-based set-top box/smart TV services like Roku and Amazon Fire TV.

MoffettNathanson Research estimates the biggest vMVPDs now are Hulu Live with TV, 3.3 million; YouTube TV, 2.3 million; Sling TV, 2.3 million;  AT&T Now, 783,000; and other services, 871,000.

Only two of those vMVPDs added subscribers in the first quarter of this year versus the fourth quarter of 2019 -- Hulu, up around 100,000, and YouTube TV, gaining 300,000. Sling TV was the big loser, down 281,000.