Cord-cutting accelerated in the first quarter as the relevance of traditional video continued to decline. More than 2.3 million people in the US dropped their pay-TV subscriptions during the quarter, according to SVB Moffett Nathanson analyst Craig Moffett. The losses marked a “significant acceleration,” compared with a 6.9% drop—”the fastest pace ever recorded,” by Moffett’s math—of 2.0 million subscribers in the year-earlier first quarter. As consumers continue to cut the cord, the share of occupied U.S. households paying for video packages is declining. About 15 years ago, Moffett estimated penetration was above 80%, but now it’s in 58.5% of households, while virtual multichannel video programming distributors (vMVPDs), or Dish Network Corp. Includes services such as DISH, – 1.12% Sling TV and Alphabet Inc. of GOOG, +0.87% GOOGL, +0.81% YouTube TV that lets people watch traditional channels virtually. SVB MoffettNathanson Current penetration is similar to levels last seen in 1992, “two years before DirecTV’s launch brought ‘cable TV’ to rural America for the first time,” Moffett wrote in a note to clients. When looking only at traditional pay TV, penetration rates fall to 45%, the lowest level in 37 years, according to Moffett. As the quality of traditional TV content deteriorates, it’s no wonder consumers continue to ditch their linear video packages. “Entertainment networks have been pretty stripped back, their best programming long since moved to SVOD,” or “streaming video on demand,” he wrote. “Regional sports networks have gone bankrupt, folded their tents and left town. Even news networks, with fewer and fewer subscribers left to pay the bills, have cut their budgets. Moffett sees the industry now in the midst of a “void cycle” that has “stripped traditional video of viewers, prompted media companies to move their best content elsewhere… and so viewership continues to decline.” Online services such as vMVPDs, Hulu Live, Sling TV and YouTube TV also struggled for overall momentum with a combined loss of 250,000 households in the first quarter, a decline that Moffett said was one of the worst on record. “As we’ve seen for the past four years, subscriptions now drop sharply in Q1 after the football season ends,” he wrote. While some services seem to be doing better than others, he estimates that YouTube TV had 300,000 opt-ins in the first quarter, while Hulu “has barely grown over the last three years.”
