About 305,000 Americans Cancelled Pay TV in Q2 — And That’s Good News

Digital Cord Cutting

The U.S. pay-TV market collectively lost a net of about 305,000 subscribers in the second quarter of 2014, historically the weakest period for the sector, according to estimates from research firm MoffettNathanson.

But that’s actually an improvement over a loss of 387,000 in Q2 last year — and signals that cord-cutting has slowed down in recent quarters, and the threat remains largely a theoretical one.

After adjusting for slow growth in household formation in the second quarter, the rate of cord-cutting slowed to an annualized rate of 400,000, according to MoffettNathanson analyst Craig Moffett. That’s just a drop in the bucket of the approximately 100 million U.S. subscribers to cable, satellite and telco TV services.

“Cord-cutting remains restrained even as pay-TV ARPU (average revenue per subscriber) continues to rise above the inflation rate,” Moffett wrote in a report.

SEE ALSO: TV Subscriptions Down; Will Cord-Cutting Get Worse?

Indeed, pay-TV providers are growing revenue more than twice as fast as the wireless industry, according to Moffett, as cable and satellite bills continue to climb. DirecTV, for example, said ARPU hit a record-high $103.26 in most recent quarter (up from $98.73 per month in the year-earlier period). Comcast’s video revenue for Q2 was $5.24 billion, up 1.2% from the year-earlier quarter, even though it shed 144,000 cable TV customers sequentially.

The unceasing rise in the cost of pay TV to consumers could hit a breaking point that would spur a larger defection from subscription television to over-the-top alternatives like Netflix, Amazon and Hulu.

“We need flexibility of working with programmers to deliver lower-priced tiers,” Jerry Kent, chairman and CEO of Suddenlink Communications, said on a panel at June’s 2014 Cable Show. Otherwise, he said, the government may step in to mandate a la carte pricing, “or we’ll have to take a hard look at what programming we want to continue carrying.”

Moffett acknowledged that the pay-TV market could face heightened pressure as its services become less affordable. “The risks to the system are now higher,” he wrote, “even though the current evidence suggests that trends remain benign.”

For now, cable TV’s losses have been mostly offset by gains by telcos, DirecTV and Dish Network. Cable operators video subs in Q2 2014 were down 2.7% year-over-year, while the satcasters grew a modest 0.7% and Verizon and AT&T were up 12.3% on an annual basis, MoffettNathanson estimated. Overall, the pay-TV segment was flat in the second quarter of 2014 with Q2 2013.

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  1. Dunstan says:

    Here’s the dirty little secret most of us already know: anything you want to watch, whether it’s live sports, premium pay TV content or anything else, is available online for free. I will watch TV shows and sports this way but never movies.

    • nerdrage says:

      Everything you want to watch is available legally through Netflix (except for sports, which I don’t care about, and news, which is available all over the place). Streaming + 1 DVD gets you everything – TV shows and movies – for $16/month. At that price, there’s no excuse for piracy and certainly no excuse to pay cable extortion.

      I suspect the bar to more piracy is less honesty than convenience. Who has time to search all over the place for what they want? Netflix is far more convenient. Just put something in your saved queue and when it’s available, there it is. In the meantime, you watch the dozens of other things in your queue. It’s actually far simpler than broadcast or cable either. That’s the main attraction.

  2. GNI Staff says:

    Reblogged this on Global News Insider.

  3. Julienne says:

    It’s NOT good! It’s proof that the economy is getting worse. HELLO? Where’s the common sense?

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