State of TV Bundle Increasingly Shaky, Analysts Say
Analysts already gloomy about the state of linear TV are increasingly bearish about its prospects. Linear's steady decline "is arguably triggering a sense of defeatism" in pay-TV circles, "so there is less and less energy being devoted to saving it,"…
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MoffettNathanson's Craig Moffett wrote investors Wednesday. The traditional distribution ecosystem "has the earmarks of a lost cause," with the annual rate of decline in Q2 nearly 10%, while conversions of those lost traditional subscribers to virtual MVPD is slowing greatly, he said. He said it appears only about a quarter of disconnects from cable or satellite TV are going to a virtual provider. The rate of decline for direct broadcast satellite remains worse than cable, but that gap is narrowing as cable's decline is accelerating, he said. Citing Comcast's Flex box, provided free to broadband-only subscribers, he said Comcast and Charter "have made clear that they are fully willing to let video customers walk, even to the point of helping them with streaming options if they desire." He said programmers "continue to strip-mine their cable networks and move their best shows" to direct-to-consumer streaming, while raising prices to offset the decline of traditional pay-TV subscribers. He said the role of sports and news as an anchor to keep some pay-TV subscribers is eroding as regional sports networks disappear from lineups and as streamers like Amazon and Apple invest in carrying sports. Expect the rapid decline in the traditional pay-TV bundle to continue, since viewers decreasingly make traditional pay TV their default, opting to tune in an over-the-top service first, ScreenMedia analyst Colin Dixon blogged Tuesday. Homes without a big channel bundle will jump from 18 million in 2016 to an estimated 45 million by year's end, he said. Sizable numbers of viewers still watch both traditional and streaming TV, but the cost of a traditional TV package exceeds $100 a month, and the most popular tier of the three top subscription VOD services is $31 a month.