Cord-Cutting Hits Worst Levels Yet
- by Wayne Friedman , May 4, 2017
Cord-cutting by traditional pay TV subscribers in the first quarter reached new levels of decline -- the worst-ever subscriber quarter loss so far, according to new research.
MoffettNathanson Research says an estimated 762,000 subscribers abandoned traditional pay TV packages in the first three months of this year -- a 2.4% drop. This compares to a decline of 141,000 in the first quarter of 2016.
What about all those new virtual multichannel video programming distributors (VMVPDs)? Adding in DirecTV Now, Sling TV -- new digital businesses from traditional pay TV providers -- didn’t help. This still resulted in an overall 1.3% decline, a loss of 459,000 subscribers.
Craig Moffett, partner/senior analyst of MoffettNathanson Research, is worried.
“This was supposed to be the quarter that media bounced back,” he writes. “This was supposed to be the quarter where media showed that they will be fine, thank you very much, in a world of virtual MVPDs.”
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Making matters worse, this first quarter witnessed the first rise in new household formation in the past four first quarters, according to the U.S. Census Bureau -- 157,000 new households were formed in the first three months of the year.
“Under normal circumstances, roughly 80% of those new households would signed up for pay TV. Where are they?” he asks.
Moffett suggests: “The most likely explanation for the fact that many subscribers are just disappearing altogether points to a more sinister explanation. Password sharing... or, less politely, piracy.”
Yet broadcast TV sells more ad $$$ for less audience. Common sense mathematics stipulates this is unsustainable yet it's been trending for two decades since the internet began.
It's been trending since the advent of cable, LZ, not the internet. Since virtually everything we buy or use costs more but gives us the same ---or less---than before--due to rising costs and, especially wages----the fact that the TV networks charge more for reaching a viewer than before but "deliver" fewer viewers per ad exposure is perfectly sustainable and advertisers have no problem with it. It's called inflation. In like manner, when digital media ---mobile, as an example---increase their CPMs----the same applies---so long as the sellers actually get the ads on the users' screens for enough seconds to give the advertisers a chance to motivate them. What's really unsustainable, is the fact that half of all served digital ads can't even be seen and of those that get to a user's screen another 50% are there for only a few seconds. Now that's a real problem.