Hulu+ Live TV and YouTube TV added 500,000 and 400,000 customers respectively in the fourth quarter, according to a MoffettNathanson estimate, as the two OTT companies have started to shake up the virtual MVPD market’s leadership board.
Unlike Market leader Sling TV from Dish Network, and AT&T’s DirecTV Now, Hulu and YouTube don’t report quarterly subscriber gains or losses. “But our sources tell us they did very well in Q4,” MoffettNathanson said in a report published Friday.
Hulu+ Live TV’s latest growth spurt puts at around 1.7 million customers, according to MoffettNathanson, which would move it on the leadership board ahead of DirecTV Now, which lost 267,000 users in Q4, mainly due to customers coming off steep promotions.
YouTube TV, meanwhile, is approaching 1 million customers, the research company postulates.
Despite the Hulu and YouTube gains, DirecTV Now’s losses and Sling TV’s modest gains (+50,000 subscribers in Q4) narrowed growth for the entire vMVPD category (740,000 vs. 900,000 in Q4 2017). That disrupted the delicate “one-for-one” balance with linear cord cutting--the gains for vMVPDs had evenly and elegantly offsset linear pay TV losses in recent quarters. In the fourth quarter, MoffettNathanson said the entire U.S. pay TV ecosystem lost around 247,000 subscribers.
The narrower gain for the vMVPD market came despite the fact that there were more consumers cutting the cord to linear.
So what’s happening here? The research company suggested a theory of exhausted pent-up demand. The vMVPD market grew rapidly over the past few years, it suggested, on the strength of unsatisfied demand from a pool of consumers who had previously cut the cord to linear services. Those consumers are now accounted for.
Investment research outfits like MoffettNathanson have dismissed the bottom-line impact of live-streamed, skinny vMVPD services. For the most part, these are all losing money at this point. But the research company conceded that vMVPDs have been a “godsend” to programmers, who are able to charge vMVPDs even higher affiliate fees for carriage.
“With a conversion rate of close to 1:1, cord-cutting has been virtually painless” to programmers,” MoffettNathanson noted. “With the weak results of the fourth quarter, the future now looks a bit more dystopian.”