Last year was the start of a major turning point for cord-cutting, as a record number of people abandoned pay TV bundles outright in favor of cheaper streaming services such as Netflix.
Now that all the major cable companies, satellite providers, and media giants have reported their fourth quarter earnings, we have a full view of how bad the damage was. Over the past year, total U.S. pay TV subscriptions dropped by 2.7 million, even factoring in growth from live TV channel bundles such as Hulu + Live TV and YouTube TV. From 2018 to 2019, pay TV subscriptions were roughly flat.
These numbers are based on the earnings statements of the largest U.S. pay TV providers—Comcast, Charter, Altice, AT&T, Dish Network, and Verizon—along with official and estimated subscriber numbers for Sling TV (owned by Dish), PlayStation Vue (which shut down last month), AT&T TV Now, FuboTV, Hulu + Live TV, and YouTube TV. The numbers don’t account for smaller cable providers or for the sports-free streaming service Philo, which has never shared subscriber figures.
What’s behind the decline? Let’s start with the obvious: Cable and satellite TV continues to get more expensive as TV networks raise programming costs. Last November, Leichtman Research Group reported that customers were paying $109.60 per month on average for traditional TV service, up about $3 per month from a year earlier.
In December alone, Comcast raised its broadcast TV fee—an extra charge that the provider often excludes from the prices it touts in ads—from $10 per month to $14.95 per month. And during 2019, Charter raised its own broadcast TV fee twice, from $10 per month to $13.50 per month. AT&T, meanwhile, has grown more reluctant to extend discounts to traditional TV subscribers. In the past year alone, it lost nearly 3.5 million DirecTV and U-Verse subscribers, more than any other traditional TV provider.
None of this would matter much to the TV industry if live TV streaming services were picking up the slack. But 2019 was the first year in which they clearly failed to do so. While traditional TV providers lost about 5.5 million subscribers last year, live TV streaming services only gained about 2.75 million subscribers, indicating that half the people who dropped conventional pay TV did not replace it with an equivalent livestreaming service. (A separate estimate this week by MoffettNathanson was even harsher, finding that only about 40% of traditional TV subscribers converted to a live TV streaming service.)
In other words, a significant percentage of cord-cutters aren’t just abandoning cable and satellite TV, they’re opting out of bundles entirely, possibly spending some of the money they’ve saved on new options such as Disney Plus. And that makes sense given that live TV streaming has also been getting more expensive. Hulu + Live TV, YouTube TV, and FuboTV all raised prices by $10 per month last year, while Sling TV raised prices by $5 per month across all of its packages. Over the year, prices for AT&T TV Now (formerly DirecTV Now) rose by a whopping $25 per month as AT&T seemingly lost interest in competing for price-sensitive customers.
Alan Wolk, the cofounder and lead analyst for TVRev, says last year’s defections are just the start of what will be considerably steeper declines over the next year or two. Although a TV bundle is still required for most local sports, the best programming is increasingly available outside the bundle through services like Netflix, Amazon Prime, Hulu, Disney+, Apple TV+, and CBS All Access. That trend will only accelerate with the launch of AT&T’S HBO Max and NBC’s Peacock in the coming months.
“Suddenly, people are just going to say, ‘Why are we paying for this?'” Wolk says.