It’s no secret that pay-TV subscriptions are down thanks in large part to over-the-top (OTT) providers such as Netflix and Hulu. But how many Americans are actually cutting the cord? According to new data from analyst Craig Moffett, the cable TV industry had a tough year. The number of cable TV subscriptions in the United States fell by 687,000 from August and September, and unfortunately for pay-TV providers, the households picking up service weren’t enough to compensate for the losses as they only gained 574,000 new ones, for a net loss of 113,000. “The pay-TV industry has reported its worst 12-month stretch ever,” Moffett and Nathanson wrote.While the numbers may look bleak, don’t expect pay-TV providers to sit back and watch subscribers just walk away. In order to win back consumers, operators are rolling out new, lower cost television packages. For example, just recently, there was talk that Comcast was preparing a new broadband and HBO streaming bundle, called “Internet Plus,” which would include limited basic TV (20 channels and video on demand), its streaming service – dubbed StreamPix –25 Mbps broadband, and HBO Go. Moreover, Cox recently concluded its first pay-TV OTT promotional trial called flareWatch, while Time Warner Cable has been working with major game console makers to get their streaming apps hosted.
Pay-TV providers are also offering up TV Everywhere (TVE) services to compete with OTT providers which allow consumers to watch their favorite shows on any mobile device while on the go. Back in 2012, Needham & Co. analyst Laura Martin estimated that TVE could add $12 billion in annual revenue to the U.S. TV ecosystem as it continues to be rolled out over the next three to five years. Moreover, for pay TV operators, TV Everywhere could add approximately $1.7 billion per year of revenue, or an extra two percent “owing to incremental pricing power driven by new services,” Martin said.
There’s also talk within the industry that pay-TV providers will soon make the shift to “all-OTT” (cue the gasps), which will end the first phase of online viewing. Although online subscription TV is still in its infancy, it will be the driver for OTT spending growth in the next five years, with global spending set to accelerate to $4.7 billion in 2018, according to market research firm, Strategy Analytics.“We are entering a new phase in the evolution of TV distribution over the public internet. Pay TV service providers are recognizing the defensive imperative in ensuring they have a major say in the development of online TV,” said Strategy Analytics’ director of digital media strategies, Ed Barton.
While it has yet to be seen if these new efforts will help cable companies put a stop to cord cutting before it’s too late, it’s safe to say that providers are not resting on their laurels.