Big “Cable TV” Ekes out Small 6 Month Gain

dkreichen1968

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The top 8 publicly traded Multichannel Video Programming Distributors reported a 43,000 gain in video subscribers, but if you project the results onto the privately held companies, and smaller players, that gain undoubtedly becomes a net loss. The 8 companies had a good first quarter with a net gain of 250,000 video subscribers, but followed that up in the second quarter with a 207,000 video subscriber loss.

The big winners in the rearrangement of deck chairs were the big two telecoms, with AT&T U-verse adding 465,000 video customers and Verizon FiOS adding 309,000 customers in the last 6 months. Both telecoms are currently sitting at 5 million video customers each.

The former boogie man in legacy cable’s closet, direct broadcast satellite, has officially turned the corner, and like it’s legacy cable brethren, is now in decline. DirecTV and Dish Network were able to gain 57,000 video customers in the first quarter, but lost 162,000 customers in the second. That is a net loss of 105,000 customers. Much of this shift can be accounted for by DBS’s inability to provide competitive internet service. Dish Network does currently have 310,000 internet customers, mostly in rural areas where there are few other options for internet service.

For legacy cable’s video service it has been nothing but downhill. Comcast, Time Warner Cable, Charter Communications, and Cablevision Systems lost a grand total of 626,000 video customers over the last 6 months. The bright spot in legacy cables fortunes is broadband internet, with those same 4 companies adding 935,000 internet customers in the last 6 months. Growth did slow in the second quarter. With the notable exception of Charter Communications, the legacy cable companies continue to be profitable as they squeeze more revenue per subscriber out of their customers.

An interesting, relatively new player in the multichannel video space is telecom CenturyLink, who reports on Wednesday, and who is poised to expand their Prism TV service into more and more of their footprint. Expect them to take another big piece out of the legacy cable’s pie.

Long term, expect the total number of video subscribers to decrease as more and more people discover free over the air (OTA) and internet delivered free and subscription over the top (OTT) video options. Meanwhile, also expect the current trend to continue, of remaining multichannel video subscribers shifting from legacy cable and satellite operators to the telecoms. Telecom growth will eventually level off as they reach a sustained market share within their footprints. Eventually, traditional multichannel video may be a service that some of the players (such as legacy cable operators) simply drop.
 

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