Q2 for pay-TV operators? With IPTV lifeline falling short, it will be dismal

The second quarter is shaping up to be a dismal one for pay-TV operators who routinely see seasonal declines in their subscriber numbers as customers trim or disconnect from the services as spring moves into summer, or simply churn for better pricing.

But this quarter appears to be unique.

For the past few years the big declines cable and satellite operators experienced (down 431,000 for the “Big 6,” Comcast, Time Warner Cable, Charter, Cablevision, DirecTV and Dish last year) have been offset by big gains from AT&T U-verse and Verizon FiOS, which added 290,000 subscribers over the same period to their IPTV services.

That still left the biggest pay TV down some 141,000 subscribers in the quarter (some experts put the number as high as 340,000), but it was explained away as seasonal losses.

The picture this quarter already is looking very different.

While Comcast has been the only cable or satellite operator to report earnings, it was down 69,000 subscribers (which was still better than a year ago when it lost 144,000) both AT&T and Verizon also have released their earnings reports.

And, from a subscriber POV, it looks like the telco emergency button is disconnected this year. AT&T reported it lost 22,000 subscribers in Q2 and Verizon only added 26,000, a net of just 4,000.

There are a couple of major factors at work.

First, it’s generally accepted that when a new service like U-verse or FiOS (or Google Fiber and any competing cable operator) comes to town, they’re likely to gain about 5% of the market pretty quickly, a combination of being “the new kid on the block” and, often, of the loss-leader deals they’re willing to offer to attract new customers. And, they’re also likely to pick up customers who have just grown tired – or been pissed off by – they’re incumbent operator. Both telcos made hay in the early day as they came blasting into markets across the U.S. with a new TV product. But, they’re no longer that different, and certainly not that new.

Over-the-top is… and it’s attracting a growing number of fans.

As researcher GfK said in a recent study, an increasing number of cord cutters are discovering “I can watch it online.”

It’s cheaper, provides a similar experience, and has a number of other advantages as well.

With more than half of the biggest pay-TV providers yet to report their quarterly figures, there’s no guarantee operators will be turning to bicarbonates to soothe their troubled tummies… but I think it’s safe to say there’s already a lot of “plop, plop, fizz, fizzes” going on. You can chalk this quarter up in the quarter-million lost subscriber category, too.


Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn