Cord-Cutting Picks Up: 1.4 Million U.S. Households Tuned Out Pay TV in 2014

Digital Cord Cutting

The pay-TV biz has agonized for years about the looming threat of consumers cutting the cord — but so far, the trend hasn’t inflicted serious pain on providers or their programming partners.

That could change in 2015, according to Wall Street analyst Craig Moffett, who suggests the industry could be facing a large wave of consumers pulling the plug on cable or satellite service or not even signing up in the first place.

In the fourth quarter of 2014, pay-TV providers in aggregate added a net 101,000 subscribers, according to Moffett. Year-over-year, the industry sub numbers was essentially flat, declining by a scant 0.1%. Cable operators lost 170,000 subs (declining 2.2%), while DirecTV and Dish Network added 86,000 (up 0.1%) and telcos added a net 185,000.

However, factoring in new household formation in the period — the fastest growth in 10 years, according to the U.S. Census Bureau — roughly 1.4 million American households either canceled pay-TV over the trailing 12 months or never subscribed, Moffett said in a research note. Since 2010, the industry has cumulatively lost (or failed to sign up) 3.8 million households, he estimated.

“A year from now, the fourth quarter may well be viewed as the calm before the storm,” Moffett wrote.

For the pay-TV business, the risk is that more consumers will find traditional TV service just isn’t a good value, as the price of programming packages continues to rise unabated.

Networks are getting ready for the possibility that the pay-TV bundle will start to disintegrate in a more material way. HBO plans to launch a standalone, over-the-top subscription service this year, and CBS debuted an SVOD service priced at $6 per month last fall. Showtime and Viacom’s Nickelodeon also have OTT plans.

Meanwhile, Dish launched a low-cost Sling TV service with about a dozen channels — including ESPN — starting at $20 per month. All together, along with subscription VOD services like Netflix, Hulu and Amazon Prime Instant Video, there are more alternatives than ever to cable TV and separately, they are significantly less expensive.

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  1. Glenn Stewart says:

    I have been trying this new service Sling TV out in attempt to cut the cable cord once and for all. In the past during football season I would get cable, then as soon as football was over I would then turn in the box and go over the air tv on an antenna. So far I really like the service and it’s only $20 a month and they added AMC & IFC to the basic package. Awesome Bye bye cable

    I kept warning Cox Communications that they needed to look into offering ala carte programming considering the fact that if you go from just the basic package to the advance package just in order to get ESPN your rate goes up over 200%. Then they dump a crap load of channels on you of which over 70% I will never watch such as Home Shopping Network 1,2,3,4,5,6,7, Cooking channel, Spike, MTV, etc

  2. Wesley says:

    The networks will have to diversify fast.

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