New data from Convergence says that U.S. pay TV lost 1.13 million subscribers in 2015, and that there are now 24.6M households without pay TV in the US. But is someone really cutting if they sign-up for Sling TV?
Convergence estimated that cord cutting accelerated in 2015, with subscribers falling 1.13 million versus 0.283 million in 2014. Nielsen also sees a big decrease in pay TV subscribers in 2015. In its latest Total Video Report, the company found that the total number of cable, satellite and telcoTV subscribers fell from 101.4 million in 2014, to 99.8 million at the end of 2015, down 1.6 million on the year.*
These numbers are sharply at odds with other data from Leichtman Research, which found that losses actually narrowed in 2015, from 1.2 million in 2014 to 0.385 million in 2015. Why such a big difference? It could be because Leichtman includes Sling TV subscribers (estimated at 0.6 million) with regular pay TV.
This raises the question, what exactly is a cord-cutter? The Oxford English Dictionary defines it as “a person who cancels or forgoes a cable television subscription or landline phone connection in favor of an alternative Internet-based or wireless service.” Technopedia’s definition is a little more general: ‘Cord cutting refers to the process of cutting expensive cable connections in order to change to a low-cost TV channel subscription through over-the-air (OT) free broadcast through antenna, or over-the-top (OTT) broadcast over the Internet.”
Both of these definitions would seem to rule out including the skinny bundle Sling TV as pay TV, and would presumably exclude Playstation Vue as well. However, the waters are getting decidedly murky when counting what constitutes a pay TV subscription and what does not.
For example, should Comcast’s Limited Basic TV package, which includes local programming (no cable channels) for $29 a month be included in Comcast’s reports of total video customers? How about Digital Economy, which includes 45 channels including a few cable channels for $40 a month? Playstation Vue, Sony’s OTT skinny bundle service, has a new entry level bundle called Access Slim that provides 55 channels (including popular cable channels) for $30 a month.
The truth is Sling TV and Playstation Vue are just as much pay TV as Comcast’s Limited Basic and Digital Economy. People that “cut the cord” from cable or satellite to move to one of these services are really changing pay TV suppliers, not engaging in some revolutionary act.
And it looks like the difference between including and excluding Sling TV in pay TV numbers is liable to get bigger. Sling TV has just launched a referral program with the NRTC (National Rural Telecommunications Cooperative) that allows the 1,500 rural utilities and affiliates to promote Sling TV to its members. For many rural customers, this could be first time they have had access to such a cost effective bundle of cable channels.
Why it matters
Different analyst groups are reporting widely different estimates for the number of people cutting the cord.
A lot of that difference could be due to the inclusion or not of skinny bundle OTT services like Sling TV in the pay TV numbers.
There is almost no difference between OTT skinny bundle packages and traditional pay TV slim packages, so both should be counted as pay TV.
*For this analysis I added Nielsen’s reported cable, satellite, and telco TV subscribers. This will result in some homes being counted twice, because they have more than