I wrote earlier about cord cutting and the new TV landscape. My original point of view is that these trends would move slower than expected, especially because the Pay TV ecosystem works very well for all companies involved. However, some news this last month is forcing me to re-think my point of view:
1. SVOD (short for subscription video on demand) subscribers are taking in more services, which for me means they truly value their on-demand video streaming services:
a. 19% of SVOD subs are willing to pay for 3 or more services (95% are starting out with Netflix and 82% with Amazon Video and adding Hulu, HBO Now, and iTunes.
2. TV usage fell in February by 4.2% for adults 18-49, and was down only 1.9% among all households
3. Nielsen’s Q4 Total Audience Report is out and is showing that live TV usage started to accelerate again after a period of a decelerating decline.
a. Live TV viewing: from Q1 to Q3 2016, the data showed a decelerating rate of decline from down 3 mins/day yoy in Q1, to down 2 mins/day in Q2, to down to 1 min/day in Q3. In Q4, that moved to a decline of 5 mins/day YOY
b. On the other hand, DVR viewing rose 1 min/day yoy to 33 min and 56% of HHs have an SVOD subscription vs. 54% in Q3.
4. Q1 2017 saw declines in Pay TV subscribers – a loss of 762,000 subs, a worst ever results for Q1 (source: MoffettNathanson)
5. Many programmers and cable providers are rushing to provide “skinny” packages to maintain and grow subscribers.
6. Apple TV, Google, Facebook, Twitter, Hulu and many cable companies are preparing streaming video packages or new original content distributed only via streaming
a. Hulu TV is launching a package with 50+ channels for $39.99/month
b. YouTube is announcing the launch of 40 new channels with original programming
c. Twitter is announcing a live streaming channel on ROKU with news, sports, and entertainment.
d. Facebook is launching new shows
e. Sports is the greatest motivator for having a cable subscription and watching Live TV. This is of course noticed by SVOD service providers. Amazon is paying $50M to stream 10 Thursday night NFL games and is making this available ONLY to their Prime customers
f. Apple, who already offers subscriptions for HBO, Showtime and Starz is apparently trying to bundle these three services. Creating such a strong offer will make it easier to cut the cord.
While I always believed that the TV landscape will change, strong competition from SVOD providers is helping consumers migrate faster to streaming services and incumbents (Pay TV programmers and MSO’s) are forced to launch streaming options of their own (e.g. HBO NOW) and be open to skinny bundles. All this is accelerating the decline in Pay TV subscribers and LIVE TV viewing.