The cord-cutting trend in the US appears to have become the new normal, with a new study showing that traditional pay-TV providers lost a huge number of customers in the final quarter of 2019.
According to a research note from analysts MoffettNathanson, the subscriber base of traditional pay-TV operators declined at a record rate of 6.8% in Q4 2019 and, even accounting for gains made by OTT TV, the overall rate of loss amounted to 3.8%.
Traditional TV operators lost around 1.5 million subscribers over the quarter, bringing the total down to 83 million by the end of the year, Variety reported, with AT&T hit hardest after the company lost 1.16 million customers.
And looking at 2019 in full, MoffettNathanson reported that large cable and satellite TV companies lost 5.5 million traditional pay-TV subscribers, a significant increase on the 3.2 million who cut the cord in 2018.
Furthermore, pay-TV household penetration stood at 65.3% at the end of last year, way down from its peak of 87.8% of US households in 2009.
According to Craig Moffett and Michael Nathanson, the trend reflects a growing normalisation of pay-TV declines – not just because of the popularity of rival video-streaming services, but also the rising cost of pay-TV subscriptions.
“Operators across the pay-TV distribution map are reassessing video strategies and they are universally shifting, albeit to varying degrees, towards strategies that accommodate, or even encourage cord-cutting,” the analysts wrote.
“As video distributors change their pricing and marketing strategies, the media industry is finally facing that long-feared moment of accelerating cord-cutting,” they added. “The real change underfoot isn’t about technology. It is about decoupling live from non-live entertainment.”
As reported by Variety, the two analysts advised media owners of TV networks that they have two options. One is to “reassemble” consumer spending in new digital products, following the example set by Disney, WarnerMedia and NBCUniversal.
The alternative, they said, is to own “the minimum number of must-have networks that have true pricing power to offset the falling volumes of video subscribers”, as Fox Corp. is doing.
Sourced from MoffettNathanson, Variety; additional content by WARC staff
