TV Subscriptions Down; Will Cord-Cutting Get Worse?

U.S. multichannel video subscribers fell by a net of 251,000 in 2013, according to SNL Kagan

The cord-cutting phenomenon, while very real, still hasn’t inflicted mortal wounds on the pay-TV biz.

But if the trend of consumers rejecting cable or satellite video subscriptions accelerates — and research shows younger Americans are less likely to have pay TV than their elders — the industry could spiral into a painful retreat.

For the first time over a full-year period, the U.S. pay-TV segment in 2013 registered a decline in subscriptions, according to a report from research firm SNL Kagan. The aggregate 251,000 net loss among cable, satellite and telco TV providers was infinitesimal — representing just 0.25% of the estimated 100.9 million total pay-TV households at year-end, according to the firm.

That’s just a drop in the bucket, to be sure. But what’s worrisome for pay-TV providers and networks alike is that millennials (ages 16-34) are considerably more likely than non-millennials (35-64) to not have a cable or satellite subscription. Among millennials, 13% say they have no pay TV, compared with 9% of the older cohort, according to a Verizon survey of 1,000 consumers.

SEE ALSO: Cord-Cutting Fears Overblown? Pay-TV Industry May Actually Grow in 2014

Industry execs have downplayed the fact that the younger demo is less inclined to have pay-TV subscriptions; the sentiment is that once they move out of their parents’ house, they’ll pay for cable. But the data tells a different story: In 2013, occupied housing units in the U.S. increased by a net of 323,000 last year to nearly 115 million, according to SNL Kagan estimates. That means household penetration of pay TV declined for the year.

Dish Network founder and chairman Charlie Ergen is one of the few industry leaders who’s been vocal about a looming crisis.

“We’re losing a whole generation of individuals who aren’t going to buy into (the pay-TV) model because they only want one particular show or they want to watch the show wherever they can or they want to watch it on their schedule, and so that generation is not signing up to satellite or cable or phone video today,” he told analysts on Dish’s earnings call last month.

To target those “cord nevers,” Dish is assembling a stripped-down virtual pay TV service that would be delivered over broadband. Under the satcaster’s deal with Disney announced this month, Dish has streaming rights to five cable networks, including ESPN and ABC. But the service would be priced far lower than traditional pay TV packages, pointing to a future of lower industry revenue even if “virtual MSO” concept takes off.

The pay-TV sector’s 2013 net loss was driven by cable providers, which collectively lost 2 million video subscriptions for the full year and 388,000 in the fourth quarter, according to SNL Kagan. Comcast, for example, dropped 305,000 TV customers for the full year and Time Warner Cable shed 825,000.

Dish and DirecTV grew, although more slowly than in previous years, with a year-end gain of 170,000 subscribers (after adding 101,000 subscribers in the fourth quarter). Telco TV providers, led by Verizon FiOS and AT&T U-verse — still relatively new entrants — added 1.6 million subs to reach 10.7 million at the end of 2013.

Popular on Variety

More Biz

  • Warner Music Group Partners With Audiomack

    Warner Music Group Partners With Audiomack

    Warner Music Group announced it has entered a partnership with the music streaming and discovery service Audiomack, marking the platform’s first licensing deal with a major label. According to the announcement, the two companies will work together on content concepts and explore ways to break emerging artists, connecting music fans with rising talent before they [...]

  • Scooter Braun Congratulates Taylor Swift on

    Scooter Braun Congratulates Taylor Swift on ‘Brilliant’ Album and Campaign

    Two days after Taylor Swift fired off the latest salvo in her battle with Scooter Braun, the manager congratulated the singer on the campaign around her “brilliant” new album, “Lover,” which arrived last night. The message came after Swift said she will be re-recording songs from her first six albums, which are now owned by [...]

  • David Koch Obit

    David Koch, Libertarian Activist and Billionaire Philanthropist, Dies at 79

    David Koch, brother of Charles Koch and one of the owners of Koch Industries, the second-largest private company in the U.S., has died at 79. According to the New York Times, Charles Koch announced the news of his brother’s death in a statement. Though he did not attribute to David’s death to a particular cause, [...]

  • Beverly Hills Realtor Accused of Stealing

    Beverly Hills Realtor Accused of Stealing From Usher, Adam Lambert

    A Beverly Hills real estate agent has been arrested on charges of stealing from the homes of celebrities, including Usher, Adam Lambert and “Real Housewives” star Dorit Kemsley. Jason Emil Yaselli, 32, is accused of encouraging an accomplice, Benjamin Ackerman, to enter homes during open houses in order to steal from them. Ackerman allegedly sold [...]

  • Pod Save America Hosts on Trump

    'Pod Save America' Hosts on Trump, the Democratic Primary and What's Wrong With Cable News

    Like many Democrats, Tanya Somanader was blindsided by the 2016 presidential election. A veteran of the Obama White House and a former speechwriter and digital specialist for House Speaker Nancy Pelosi, Somanader was gearing up for a Hillary Clinton administration. Instead, she had to grapple with the reality of a Donald Trump presidency. “A lot [...]

  • Ann Sarnoff Warner Bros

    Ann Sarnoff Formally Takes Reins of Warner Bros. as CEO

    The Ann Sarnoff era at Warner Bros. has begun. Sarnoff formally took the reins as Warner Bros. chair-CEO on Thursday, two months after she was appointed to the post. Sarnoff told employees in a memo that she has been impressed by the company’s track record during the past year amid a period of upheaval for [...]

  • Former movie producer Harvey Weinstein (L)

    Harvey Weinstein to Be Arraigned on New Indictment

    Harvey Weinstein is set to appear in court on Monday for an arraignment on a new indictment, the Manhattan D.A.’s office said Thursday. Prosecutors announced last week that they would seek a fresh indictment, which would allow actress Annabella Sciorra to testify at Weinstein’s trial. The move came after Justice James Burke ruled on Aug. [...]

More From Our Brands

Access exclusive content