The growing number of virtual MVPDs set to burst on the scene in the coming months could take a big bite out of pay TV customers, with UBS Securities estimating that as many as 15 million subscribers could take that option in the next five years.
But cable operators are expected to weather the storm better than their satellite TV and telco TV counterparts, according to UBS.
UBS estimates that total pay TV subscribers will decline by about 2% in 2016, about the same level as last year. But that drop is expected to double in 2017 to 4.5% and rise again to nearly 6% in 2018.
The bulk of those losses will be from satellite and telco TV, as the additional $20 per month charge many MSOs tack on to unbundled broadband service will be enough to temper heavy declines, UBS wrote.
Existing OTT services Sling TV and Sony PlayStation Vue have reached the 1 million subscriber mark, a milestone according to UBS. Other services like DirecTV Now, Hulu’s upcoming skinny-bundle service slated for early next year and YouTube Unplugged, the OTT service from the Google-owned online video pioneer, are expected to add to the mix.
DirecTV Now is slated to launch in the fourth quarter and already is racking up carriage deals. This month alone it signed pacts with Turner Broadcasting System, Starz, NBCUniversal, Discovery Communications and Scripps Networks. At launch, the service will offer more than 100 channels of live and on-demand programming from major networks as well as premium add-on options.
While AT&T has been scarce on details, UBS estimates the product could be priced competitively at between $40 and $60 per month. UBS estimates that after its anticipated Q4 launch, DirecTV Now could reach about 1.1 million customers in 2017, growing to 2.5 million by 2020.