Rising prices for traditional TV bundles and growing digital options are driving customers online and away from traditional TV. According to Bloomberg, in 2016, cable and satellite TV companies lost over 1.7 million paying customers, and our data suggests they’re going to surpass that this year.
Signs are emerging that the pay-TV ecosystem is in full-blown crisis mode.
AT&T partly blamed competition from over-the-top services for subscriber losses in its satellite business, but it’s unclear how many satellite defectors ended up moving to DirecTV’s own streaming service. The company is also blaming stricter credit standards for customers and the impact from hurricanes. The same night, Viacom cautioned that its distribution deal with Charter Communications Inc., the second-biggest cable US company, may lead to a blackout, potentially testing whether millions of viewers are willing to go without MTV and Nickelodeon. Barring any major fourth quarter turnaround (a traditionally slower time for new TV subscription signups), there is nothing to suggest this trend slowing, either.
To compete, AT&T, Dish Network, and others are now offering cheaper, online-only versions of cable to lure customers back.
Experts are saying that 2017 is on pace to have biggest pay-TV subscriber losses ever.
EMarketer the online research company says that at the start of 2017, 16.7 million adults in the USA had cut the cord and at the end of the year that number would grow to over 22 million. AT&T stock fell 6.1 percent after the announcement in the biggest one-day loss since November 2008.
Stock affected on Thursday by nervous investors included AMC Networks that dropped 7%, Dish Network was down 5%, Discovery Communications, E.W. Scripps and Sinclair Broadcast Group all dropped by 4% and Charter was down 3%.
“It is becoming increasingly clear that the wheels are falling off of satellite TV”, said Craig Moffett, an analyst at MoffettNathanson LLC, in a research note. Only one of the large conglomerates, 21st Century Fox, recorded a gain, a paltry one-tenth of 1 percent.