The U.S. pay TV industry saw a total of 412K subscribers cancel service in Q3 (-0.5%) versus the total number of subscribers in Q2, with a total of 75.9 million remaining in the system.
This is the best overall performance since Q3 2020, which saw a total subscriber increase of 664K subscribers (+0.8% quarter-on-quarter), with the best quarter prior to that being Q3 2019 (-288k subs, -0.3% QoQ).
Also occurring in Q3 of each year: the return of the NFL season. The pull of the NFL is hardly a secret, but it is the one property with the power to bring viewers back to pay TV.
MVPD subscriptions continued their downward trajectory with a total of 63 million subscribers, falling by -1.2 million (-1.9%) on the quarter and -5 million (-9.8%) versus Q3 2020.
All MVPD providers saw negative subscriber churn — i.e., more canceling subscriptions than signing up for new ones. Charter has the "best" negative churn rate, only -0.9% versus Q2.
With DirecTV now spun off from AT&T as a private entity, subscriber counts are no longer published. A DirecTV representative declined to provide an updated count, so using VIP+’s estimated subscriber count sees the service with a QoQ negative churn rate of -2.7%.
The NFL’s return fed the VMVPD market, which saw a subscriber increase of 12.85 million. This equates to a QoQ increase of 780k (+6.5%) and a YoY increase of 1.1 million (+9.4%). Progress, but as noted previously, this will not stem the tide.
The third quarter has always seen high positive churn rates for reporting VMVPDs, most notably for sports-oriented FuboTV. Given this period has the start of the NFL season — and the strong uptick in viewership this year — it's safe to assume the NFL has a big hand in softening the overall decline. It’s worth noting that this was the first quarter since Q3 2020 for Hulu to see an increase in subscribers.
As noted, FuboTV sees a big spike in subscribers each Q3, but 2021 saw the greatest growth by far. With the NFL season set to run to mid-February this year as a result of the season being extended by an additional game, it won’t come as a surprise to see Fubo’s subscribers soon top 1 million.
The downside to this for the TV industry is it demonstrates that for some consumers, TV service is now seasonal, with streaming better serving the overall needs of a growing swath of the market. Equally, the flexibility of VMVPDs — no 12-month contracts — helps to attract those seasonal consumers to their offerings rather than traditional MVPDs.
This has led to some providers diversifying their offerings. Broadband subscriptions from MVPD providers substantially outnumber those for traditional MVPD service, with VIP+ estimating that by the end of 2022, there will be twice as many broadband subscribers than pay TV subs across Altice, Charter, Comcast and Verizon.
Mobile is another area providers are getting into, as they look to own the streaming pipe whether in or out of home. Within the last few years, Altice, Charter and Comcast have launched their own mobile plans for subscribers, with Dish getting into the game, too, with its purchase of Boost Mobile.
While revenues are currently moderate relative to other MVPD streams, mobile will increase in importance in the coming years as service providers look to gain as much of a share of advertising in the new world as possible.
This diversification will continue. Comcast is now selling its own brand of XClass connected TVs via Walmart. MVPD providers are waking up to the realization that while there will remain a rump of committed TV subscribers, they need to widen their portfolio in order to keep increasing revenue.
There will come a point where broadband subscriptions reach their finite zenith and will not be able to paper over the growing revenue cracks for MVPD providers. Mobile and CTV offer new ways to monetize the subscriber base, and more innovations are to be anticipated.