Only 75.5 million households have pay-TV subscriptions, the lowest number since 1992 (including internet services such as YouTube TV and Hulu), and the US cable business had its worst quarter ever. 58.5% of US households were covered, down more than 7% from a year earlier. Based on the first quarter statistics, SVB MoffettNathanson analyst Craig Moffett predicted: “We are watching the sun beginning to set.”
US cable, satellite and internet TV providers have collectively lost 2.3 million customers in the first quarter of 2023 due to the development of streaming video, marking the biggest loss to date. Among them, cable TV operators’ customer loss rate was -9.9%, while that of satellite TV providers DirecTV and Dish Network was -13.4%. This is one of the worst quarters in the industry’s history even for so-called “virtual multichannel video programming distributors” such as YouTube TV and Hulu, which lost 264,000 customers.
By the way, we have talked about this trend a year ago.
The nation’s largest pay-TV provider, Comcast, lost the most video subscribers overall – 614,000 – in the first quarter. The only service tracked by Moffitt that gained customers in the first quarter was Google-owned YouTube TV, which added about 300,000 members during the quarter (bringing its total to 6.3 million) and 1.4 million net subscribers over the previous year. According to Moffett, Hulu has barely grown over the past three years (and lost about 100,000 live TV members in the first quarter), while FuboTV had its worst quarter ever, losing a record 160,000 subscribers in North America.
The pay-TV sector is suffering from what Moffitt calls a “the impoverishment cycle”, whereby rising sports fees lead to higher retail costs, which in turn exacerbate cable cuts and force distributors to raise prices to cover losses. Even ESPN, a former pillar of the incumbent ecosystem, acknowledges that on-demand streaming will eventually become a viable option.
Has the pay-TV market reached its limits? According to Moffitt, 50-60 million US households were once the “bottom line” for the pay-TV industry. However, according to Moffitt’s latest assessment, “as things stand, we expect cord-cutting to grow even worse and the long-theorized ‘floor’ to be breached. “