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Summary:

The pay TV industry had been hit hard by subscriber losses in the second and third quarters of last year, dropping 330,000 users in that time. But subscriber numbers from major pay TV operators in the fourth quarter suggest the cord cutting trend may be slowing.

cable cut

After two successive quarters of subscriber losses, the big pay TV providers might actually be making a comeback. It will be a few more weeks before research group SNL Kagan comes out with its final analysis of the multichannel video market. But at least for now, it appears that subscriber numbers for the fourth quarter are set to show a slight turnaround.

The following table gives a snapshot of pay TV subscriber numbers reported by public cable, satellite and IPTV providers over the last two quarters:

Company 4Q Sub +/- 3Q Sub +/-
Comcast -135,000 -275,000
Time Warner Cable -141,000 -155,000
Cablevision -35,000 -24,500
AT&T 246,000 236,000
Verizon 182,000 204,000
DirecTV 289,000 174,000
Dish Network -156,000 -39,000
Total 250,000 120,500

A few important caveats: These numbers only represent the major public pay TV providers that have announced so far, but there are still dozens of cable companies not represented in this chart — and those private providers could have a big impact on the final numbers. In the third quarter, for instance, private cable companies lost about 200,000 subscribers. While the top four cable providers reported about 518,000 subscriber losses in the third quarter, SNL Kagan reported that all cable providers — including those that don’t publicly report their earnings — lost a total of 741,000 subscribers in the third quarter.

And Charter Communications reports its earnings next week, which could have some impact on what the final numbers look like. In the third quarter, Charter lost about 64,000 subscribers, and we expect similar losses in the fourth quarter. If its subscriber numbers swing dramatically in either direction, however, it could have substantial impact on subscriber numbers.

For now, though, public pay TV providers have reported about 130,000 more subscribers than at the same point in the third quarter — which is notable, since the third quarter’s final count was down by 119,000 subs. So the final fourth quarter numbers could be flat, or even up.

So what was different in the fourth quarter? While it’s difficult to pinpoint exact reasons for big changes in subscriber additions or subtractions, we could make some educated guess about why the numbers differed.

Comcast’s TV Everywhere Gambit May Finally Be Paying Off

The biggest difference between the third and fourth quarters comes from the number of subscribers Comcast lost — or in the case of the fourth quarter, the number it didn’t lose. While 135,000 subscribers lost is still not a favorable number, it’s less than half the number of subs lost during each of the previous two quarters. We’ve hypothesized that one reason Comcast subs weren’t as quick to leave during the fourth quarter is that they’re seeing more value from their cable subscription, which could be attributable to availability of cable content online and through the Comcast Xfinity iPad app.

Live Sports Lead the Day

The fourth quarter is packed with live sports events: The World Series, the introduction of the NBA and NHL seasons, and most of the NFL’s games are played during the period between October and December. A quick look at Cablevision’s sub numbers show how a blackout of Fox during the MLB playoffs and World Series can accelerate losses. And let’s face it: Americans love football, and if you’re a football fan, DirecTV is the place to be. While the NFL season technically starts in September, we wouldn’t be surprised if DirecTV’s robust subscriber growth in the fourth quarter was due in part to its exclusive access to the full slate of NFL games through its NFL Sunday Ticket service.

So what does this mean for Netflix? Despite what looks like flat-to-up pay TV subscriber numbers, Netflix grew aggressively during the fourth quarter, adding 3 million subscribers and ending the year with more than 20 million users. And its viewers are watching more streaming video than ever. That suggests that for now, users are tuning in to online services like Netflix as supplemental to their existing cable subscriptions.

Photo courtesy of (CC-BY-SA) Flickr user Akarsh Simha.

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  1. Or consider another theory proposed earlier this week by my conspirator “Someguy”…

    http://gigaom.com/video/5-steps-to-cutting-the-cord-a-guide-to-canceling-cable/#comment-598296

    “All you have to do here is look at the need to have instructions (5 steps to cord cutting) or the use of a third party (GoodbyePayTV) to realize how far this needs to go before cord cutting is more than a temporary economic reaction or a tech hobby.” The numbers shown above also look like people are reallocating themselves to satellite/fiber/IPTV (ie providers who are actually innovating).

    The statement “Is pay TV making a comeback” is ludicrous linkbait: cable saw its first subscriber dip in history (which wasn’t much of a drop to begin with) and you’re calling it a comeback? To paraphrase LL Cool J, don’t call it a comeback, they’ve been here for years…

    1. I was actually thinking of quoting LL Cool J myself, but that’s besides the point.

      Let’s be clear: I still believe that the loss of subscribers in Q2 and Q3, while small, are part of a secular and not a cyclical trend. I’d be willing to bet that we’ll see declines — albeit small declines — in MVPD subscribers for FY2011.

      And as for the five steps to cutting the cord: frankly, it’s easier than it’s ever been to access premium content online. Millions of users already have access to online services through connected TVs, and we’ll see even more come online this year. At that point, it’s just a matter of making a call to your cable company to cancel.

  2. Interesting findings. It’s true, I only watch tv for sports nowadays.

  3. Vamshi Sriperumbudur Thursday, February 24, 2011

    Good to see some real numbers.

    It seems ATT and Verizon aren’t doing too bad.. Ryan you think this is partly due to their multi-platform (Mobile being one) presence?

    1. I’m not sure that the multiplatform, quad-play type bundles are what’s causing people to jump to AT&T or Verizon, but bundling is a really sticky way of keeping them there. The more likely answer is that users are warming up to increased competition, particularly where fiber and high-speed broadband are involved. When I switched from Time Warner Cable to Verizon FiOS a few years ago, I did so because the broadband speeds were about twice as fast as cable.

  4. Even if those numbers hold, I doubt cable providers will be cracking the champagne; they can see the market shifting, and it’s not at all coincidental that residential subscriber counts may at least hold steady for the providers who’ve worked hardest to meet the consumer demands for speed and bundling. (Disclosure: I work in this industry.) What that effort depends on is something consumers rarely notice unless it’s not up to snuff — back office architecture that supports bundling, convergent billing, and tiered rates efficiently enough to turn a profit without spiking prices. And a lot of cable companies just haven’t made that leap.

    Unfortunately, that’s going to be a double shot in the foot going forward, because the same BSS upgrades that would keep pace with consumer innovation would also make cable competitive in the enterprise market that telcos have thus far dominated. As competition heats up — in both growing and tightening markets — now is not the time to let infrastructures stagnate. http://bit.ly/fku3wJ

  5. Add me to the 4Q AT&T subscribers, I dumped Comcast because it was too expensive. My ISP speed is slower but I can still stream movies and save a ton of money.

    The numbers could be an indicator that the economy is recovering and foreclosures have bottomed out(you don’t need cable if you don’t have a home).

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