Cord-cutting is slowing down, defying most predictions

Cable providers have had their share of bad news lately. Analysts have been predicting an increasingly negative outlook for cable, pointing to advances in technology and a supposed dwindling interest in PayTV.

Providers were particularly concerned when forecasters relayed statistics showing a decline of almost 4 percent in cable customers from 2017. The year 2017 was no banner year for providers, as data showed that the number of customers dipped by a little bit less than 3.5 percent from 2016.

However, a recent report from independent research firm MoffetNathanson LLC, which specializes in media and communications work, tells a slightly different, more hopeful story. The decline in customers paying for cable may actually be coming to an end.

Q2 slowdown may be a sign

MoffetNathanson’s principal and senior analyst Craig Moffett highlighted the slow-down in the decline of paying customers. He noted that there was only about a 3 percent decline in customers cutting the cord in the second quarter of 2018.

In addition, it may be that cable subscriptions have hit the bottom and may be making somewhat of a comeback. While it is too soon to say that the downtrend in cable subscriptions has hit its inflection point, Moffett indicated that analysts may have been “too bearish for Cable.”

Winds of change?

Moffett said in a research note that PayTV subscriptions were up by 0.1 percent in the second quarter. It may be too soon for cable providers to break out the bubble, but that does not mean there is no cause for optimism.

There are a number of factors which may be impacting the number of customers choosing to remain with PayTV, and some of these factors have powerful, long-term effects. For example, part of the change in the overall decline may be due to the housing market in a number of key areas.

While housing prices have been increasing, there is a strong demand for homes in many urban communities. In 2017’s second quarter, the U.S. did not show any meaningful growth in new occupied homes. However, in the second quarter of 2018, there was a jump of about 500,000 houses.

These new homeowners may be forming part of an expanding customer base. Deloitte noted that there is even a chance there will be a “short-term boom” in house construction. This rise in new homes could indicate a brighter future for cable providers.

Housing is only part of the story. The economy seems to be shrugging off its recession-era blues. In an August news release from the Bureau of Labor Statistics, U.S. Department of Labor, it was reported that the unemployment rate was 3.9 percent.

Improvements in the labor market and quality of jobs could also encourage the creation of a larger PayTV subscriber base.

Seeing the future

Forecasting trends in any sector of the market is a tricky business. The cord-cutting trend may be slowing or may even be completely ending. Analysts base future predictions on a range of information, and some of that data could be skewed, misinterpreted or just plain wrong.

Time will eventually show how housing and jobs could be impacting cable providers. It does seem, however, that the reports about cable’s demise may have been exaggerated.