Cord Cutting Picks Up Steam
Last week was a seminal moment in the saga of how traditional TV distribution is migrating to digital. During a five day period the three biggest cable providers announced their Q1 Earnings, which included stats on net subscriber attrition (aka the cord cutters). In the most recent three month period AT&T/Direct TV lost 188K customers, Charter/Spectrum lost 122K, and Comcast lost 96K. Since 2015 all the carriers have lost 8M subs in the US, with over 2M US households going cordless in just the past year. There are about 126M households in the US, so you can imagine how this kind of bleed rate could fundamentally change an entire industry within the next decade.
Most analysts are making a direct correlation between these losses and gains for OTT video services like Netflix who added 2M worldwide subscribers in the same period. In the graphic below you can see impact this subscriber shift is having on the respective stock prices.
To counter this erosion the cable operators are trying to harness their ISP infrastructures and turn that into a selling point. As an example on March 1st AT&T literally flipped the script with its Unlimited Plus plan, which features free home internet delivery with a cable/Direct TV subscription. This is smart because AT&T knows households are going internet-first anyways, so why not use that service as the loss leader to retain subscriptions for their entire bundle?
As the number of cord cutters and cord nevers continues to grow over the next few years Big Cable will need to reinvent itself with more diversified portfolios of content and distribution platforms. Given how high the stakes are this will literally be must see TV.