U.S. Pay TV Thrown for Net Loss: Study

Q1 Gains Not Enough to Avoid First-Ever Annual Net Subscriber Loss, as Consumers Opted for Mix of OTA, OTT Options

Video subscriber gains in the first quarter of 2013 by top U.S. service providers were not enough to avoid a first-ever net subscriber loss in the category over a four-quarter period, Leichtman Research Group (LRG) reported Monday.

LRG’s analysis of the top 13 multichannel video providers in the U.S., representing 94% of the market, showed that they added about 195,000 net additional video subs in the period, down versus a net gain of about 445,000 in the year-ago quarter, and a net gain of about 470,000 in the corresponding quarter of in 2011.

“These Q1 gains were not enough to offset subscriber losses from Q2 and Q3 2012, leaving major multi-channel video providers with a net loss of about 80,000 subscribers over the past year, compared to a net gain of about 380,000 over the prior year,” LRG said, noting that it marked the first industry-wide subscriber loss over a four-quarter period since the firm began tracking the data over a decade ago.

LRG president and principal analyst Bruce Leichtman attributed the downward trend to a combination of a saturated market, an increased focus by service providers on acquiring higher-value subs, and seeing some consumers opt for a “lower-cost mixture of over-the-air TV, Netflix and other over-the-top viewing options.”

 “The traditionally weak second quarter is sure to show additional net subscriber losses, but it is unlikely that these modest industry losses are a harbinger of a more dramatic near-term market decline,” Leichtman added.

Among other findings, the top multichannel video providers accounted for 94.9 million subs by the end of the first quarter, with the top nine MSOs serving 51 million video subs, versus satellite (34.2 million) and top major telcos (9.7 million).

The top MSOs tracked by LRG lost 264,000 video subs in the first quarter, and shed about 1.56 million over the past year, just more than losses of 1.53 million in the prior year. The top telcos added 401,000 video subs in Q1, and 1.319 million over the past year, down from 1.475 net adds over the prior year; while satellite TV providers signed on 57,000 net subs in Q1, the fewest in any Q1 over the past decade, according to LRG.