U.S. Pay-TV Market Experiences 2Q Decline in Customer Churn
Thanks to the emergence of over-the-top (OTT) content providers like Netflix, Hulu and Crackle, many industry pundits have wondered whether we’ll see a gradual trend of customers deciding to cut the cord, so to speak, and stop paying for traditional television services.The numbers appear to discourage that thought, as customer’s today are no more likely to become cord cutters than they were in 2011. On top of that, while the pay-television industry as a whole can’t boast a net increase in subscribers during the second quarter of the year, companies have noticed the rate at which customers are leaving has slowed down considerably.
In 2014, the 10 largest pay-TV operators lost 165,000 customers between April and June, accounting for two-tenths of 1 percent of their overall subscriber bases, according to recent research released by Informitv. That figure compares to the nearly 275,000 customers the sector lost a year ago and the 207,700 lost during the second quarter of 2012.
It’s important to note, however, that having realized net gains during other quarters over the past two years, the 10 largest providers have gained customers year-over-year. In fact, since 2012, 1.5 million paying customers have joined the pay-TV customer base.
The rise of OTT content has certainly changed the pay-TV landscape. But those operators have answered back with TV Everywhere, though the technology certainly has its fair share of kinks to work through. But OTT content may very well serve as something that strengthens the offerings of pay-TV providers in the long run.
As competition increases and cable packages come down in price, we expect that it’s only a matter of time before pay-TV providers once again begin posting net gains in the second quarter. Will it begin next year?