nScreenMedia OTT multiscreen media analysis

US Pay TV


For Q3 2018 Since Q3 2017
Pay TV households90.4M-6%
Households without pay-TV31M+37%
Pay TV penetration75%-8%
Tables and graphs updated 11/13/2018

Commentary

One-quarter of US homes don’t have cable, satellite, or telco TV

(comments on Q3 2018 performance)

The traditional pay television industry’s penetration of U.S. homes has fallen to 75%, down from 88% in 2014. The decline in penetration will cost the industry nearly $16 billion this year.

Q3 subscriber numbers for (v)MVPDs

According to Leichtman Research, top cable, satellite, and telco TV operators lost 1.05 million subscribers in Q3 2018. Here’s how each segment fared:

  • Cable lost 244,000 subscribers, or 0.5%.
  • Telco TV lost 79,000, or 0.9%.
  • Satellite performed the worst, losing 726,000 or 2.3%.~

Adding in smaller cable and telco TV operators not covered by Leichtman Research, there were approximately 90.4 million pay TV subscriptions at the end of Q3 2018.

During Q3 2018, the top two vMVPDs – Sling TV and DirecTV Now – added 75,000 subscribers to reach 4.2 million. Since the beginning of the year, the two services have added 450,000 subscribers. Kagan estimates that all vMVPD providers gained 2.1 million subscribers in the last three quarters. With gains slowing at Sling TV and DirecTV NOW, the Kagan data suggests YouTube TV, PS Vue, and others could be doing much better.

Many consumers rejecting pay TV model completely

Kagan estimates that vMVPD services have gained 2.1 million subscribers and MVPDs have lost 2.8 million since the beginning of the year. The missing 700,000 have decided they can do without linear pay television altogether.

It’s easy to see why so many feel they can live without pay TV when you look at other data. For example, Roku reports that its active users stream 2 hours and 10 minutes per day.  Heavy users likely stream double that, or more. Similarly, Netflix users watch for an average of 1 hour and 15 minutes. Given the SVOD giant will likely spend $10 billion on new shows this year, customers will have plenty of things to watch without MVPD services.

For local sports, which are mostly not available online, there’s always over-the-air broadcasts. Nielsen says 13% of TV homes currently watch this way.

Homes without cable, satellite, telco grow sharply

31 million U.S. homes, a quarter of all occupied homes, do not have either cable, satellite, or telco TV. Four years ago, just 12% of occupied homes were without traditional pay TV.

Since 2014, the number of occupied homes in the US has increased from 114.7 million to 121.4 million in Q3 2018. Penetration of traditional pay TV in 2014 was 87.7%. If penetration had remained the same over the last four years, traditional pay TV should have added 5.9 million homes. Instead, the industry lost 10 million. In other words, the real loss in traditional pay TV homes is 16 million.

To put things in perspective, the 16 million homes the industry is missing out on would have provided an additional $1.3 billion in subscription revenue a month.

Why it matters

The declining subscriber base for traditional pay TV is nothing new.

However, for the past two years, vMVPD gains have roughly balanced out MVPD losses.

In the third quarter, it became clear a substantial number of consumers are quitting their pay TV provider and not subscribing to a vMVPD service.


~Small inconsistencies in the data reported in this article are likely due to the differences in various estimates for pay TV performance from the several sources quoted in this opinion.

Tables and graphs on this page are derived from various resources including pay TV operator financial fillings, Leichtman Research, Nielsen et al.  The analysis and calculations  based on this data was performed by nScreenMedia